an analysis of residential water demand and water rates in

36
WRRC Bulletin 96 An Analysis of Residential Water Demand and Water Rates in Minnesota By Richard L. Gardner Department of Agricultural and Applied Economics University of Minnesota WATER RESOURCES RESEARCH CENTER UNIVERSITY OF MINNESOTA GRADUATE SCHOOL The work upon which this publica- tion is based was supported in part by funds provided by the United States Department of the Interior as authorized under the Water Re- sources Research Act of 1964, Pub- lic Law 88-379 September 1977 Minneapolis, Minnesota

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WRRC Bulletin 96

An Analysis of Residential Water Demand and Water Rates in Minnesota

By Richard L Gardner

Department of Agricultural and Applied Economics University of Minnesota

i

I

WATER RESOURCES RESEARCH CENTER UNIVERSITY OF MINNESOTA GRADUATE SCHOOL

The work upon which this publicashytion is based was supported in part by funds provided by the United States Department of the Interior as authorized under the Water Reshysources Research Act of 1964 Pubshylic Law 88-379

September 1977 Minneapolis Minnesota

for

CONTBNTS

Page

i ]

I C

ist i ca1

1

raquo Critcri -1 Common 1orm3

inr

lO

Jill

FTGUHES

Figure Number Pafle

1 Curve Residential

Hypothetical Curve Water

Charge RaLe 25

I Bi as Number 26

5 Block Form

ini BJ ock Rate Form 27

7 reDsinv Block 13

of Borm (Wat er l(

9 ~ Frequency nate Forms 17

ion of i1omand C03t ) of ater 1+2

H f Water

ce for Water

11 mlOrt Hun Hun of WaLeI

iij

ii

Table Number Page

Re~ults of Varj U1ed in HOdel Demand 11

Wat and Rate (~o mT)iri3

of the

of water resources non-Federal research

5

SUlI11I1ar-y

Stat 11pJium-sized n

SUlIUnafY ~)tructllreG Cities

Surrrrnary

Utility

9 Statewide son BUb Form

re-~rnr~[l

publicat=-ons to

Thi WRTer

in j rel low infc proJ

Armnal 11 Ln(llt jgrectnent flo j )1-51-0001-7050

Watfr y~)tem MTnnesota

Pr 1nc 1pa1 Invest i f~li ()r Unl veTS ty of t~illnesota

AgriJuI t ural

1911 Project Completed June bull 19H

ocr -

and Water fkwer

nne--ota

v

Iv

TlrrH()DlICTIONPubllcat~v N

Price

c

~3 bull

nrT

1111shy

vi

in

b7f in

in the

PROCED1TRE

unit ity

rnad_f Pri

]1 =lt -~~ __ J~n

~ fr

3

Ihe Demand for Water

implied in introduction ing LleE is

inc rement of for a quantity of water So demand be coneei veri the several di fferent different bv Fipure I represent the three

is a~)sumed the individual water i obtained AFl and

ReEd

llsinr the

smooth curve

Fi l1esidenti Hater

Prico

quantity ity

domand on would the priotmiddot ( Lty demand to increacgte as price Tf th(re are knk in the temfll1d

residential is kink

ope fall ow1y

icity depends also unon curve

The Survcy_

on res] ial 10 ciLy watlr resident

and what uses vhen servel by system capi tu is found A

b(- calculated and other aff(c1 ner

obtai n the water fales rate both amI breakdown into demand

essary August lqrG 8 mail survey was lerk munie [pality having water system in the

Heal til lhe [urvey well as of

endorsed by

Allpl Economic s S3J1lVl e form is the appendix

water dmand Hong (115) and (11 ) it wari no t ed exulained decrased with

ons Leaot

ranre flwenLy-fivc hundred lower l I S Census TIureau led

rrwenLy-five thousan(l person was as the c iVi wi public water range wrc incl1Hhd wit-hi n in~11

population of cit may since have fallen below Lwenty-five arown twentv-five thousand

the hundred fLy surveys Minnesota munlcinulit only Lwenty-fi ve were applicahl c this hundred

fi fty-two percent of retllrned However of followup

of medium-~

waleI are

There count less

these variubles water

llmnber inclusion

icant

avall~JbilitV of was 1 i sele~t i nr~ variables ] own 19(0 census Tlrovided Lhe ~_ime constraints compilation of variabl such lot area which would have beerr accurute meaSllrc irr i needs

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

for

CONTBNTS

Page

i ]

I C

ist i ca1

1

raquo Critcri -1 Common 1orm3

inr

lO

Jill

FTGUHES

Figure Number Pafle

1 Curve Residential

Hypothetical Curve Water

Charge RaLe 25

I Bi as Number 26

5 Block Form

ini BJ ock Rate Form 27

7 reDsinv Block 13

of Borm (Wat er l(

9 ~ Frequency nate Forms 17

ion of i1omand C03t ) of ater 1+2

H f Water

ce for Water

11 mlOrt Hun Hun of WaLeI

iij

ii

Table Number Page

Re~ults of Varj U1ed in HOdel Demand 11

Wat and Rate (~o mT)iri3

of the

of water resources non-Federal research

5

SUlI11I1ar-y

Stat 11pJium-sized n

SUlIUnafY ~)tructllreG Cities

Surrrrnary

Utility

9 Statewide son BUb Form

re-~rnr~[l

publicat=-ons to

Thi WRTer

in j rel low infc proJ

Armnal 11 Ln(llt jgrectnent flo j )1-51-0001-7050

Watfr y~)tem MTnnesota

Pr 1nc 1pa1 Invest i f~li ()r Unl veTS ty of t~illnesota

AgriJuI t ural

1911 Project Completed June bull 19H

ocr -

and Water fkwer

nne--ota

v

Iv

TlrrH()DlICTIONPubllcat~v N

Price

c

~3 bull

nrT

1111shy

vi

in

b7f in

in the

PROCED1TRE

unit ity

rnad_f Pri

]1 =lt -~~ __ J~n

~ fr

3

Ihe Demand for Water

implied in introduction ing LleE is

inc rement of for a quantity of water So demand be coneei veri the several di fferent different bv Fipure I represent the three

is a~)sumed the individual water i obtained AFl and

ReEd

llsinr the

smooth curve

Fi l1esidenti Hater

Prico

quantity ity

domand on would the priotmiddot ( Lty demand to increacgte as price Tf th(re are knk in the temfll1d

residential is kink

ope fall ow1y

icity depends also unon curve

The Survcy_

on res] ial 10 ciLy watlr resident

and what uses vhen servel by system capi tu is found A

b(- calculated and other aff(c1 ner

obtai n the water fales rate both amI breakdown into demand

essary August lqrG 8 mail survey was lerk munie [pality having water system in the

Heal til lhe [urvey well as of

endorsed by

Allpl Economic s S3J1lVl e form is the appendix

water dmand Hong (115) and (11 ) it wari no t ed exulained decrased with

ons Leaot

ranre flwenLy-fivc hundred lower l I S Census TIureau led

rrwenLy-five thousan(l person was as the c iVi wi public water range wrc incl1Hhd wit-hi n in~11

population of cit may since have fallen below Lwenty-five arown twentv-five thousand

the hundred fLy surveys Minnesota munlcinulit only Lwenty-fi ve were applicahl c this hundred

fi fty-two percent of retllrned However of followup

of medium-~

waleI are

There count less

these variubles water

llmnber inclusion

icant

avall~JbilitV of was 1 i sele~t i nr~ variables ] own 19(0 census Tlrovided Lhe ~_ime constraints compilation of variabl such lot area which would have beerr accurute meaSllrc irr i needs

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

Table Number Page

Re~ults of Varj U1ed in HOdel Demand 11

Wat and Rate (~o mT)iri3

of the

of water resources non-Federal research

5

SUlI11I1ar-y

Stat 11pJium-sized n

SUlIUnafY ~)tructllreG Cities

Surrrrnary

Utility

9 Statewide son BUb Form

re-~rnr~[l

publicat=-ons to

Thi WRTer

in j rel low infc proJ

Armnal 11 Ln(llt jgrectnent flo j )1-51-0001-7050

Watfr y~)tem MTnnesota

Pr 1nc 1pa1 Invest i f~li ()r Unl veTS ty of t~illnesota

AgriJuI t ural

1911 Project Completed June bull 19H

ocr -

and Water fkwer

nne--ota

v

Iv

TlrrH()DlICTIONPubllcat~v N

Price

c

~3 bull

nrT

1111shy

vi

in

b7f in

in the

PROCED1TRE

unit ity

rnad_f Pri

]1 =lt -~~ __ J~n

~ fr

3

Ihe Demand for Water

implied in introduction ing LleE is

inc rement of for a quantity of water So demand be coneei veri the several di fferent different bv Fipure I represent the three

is a~)sumed the individual water i obtained AFl and

ReEd

llsinr the

smooth curve

Fi l1esidenti Hater

Prico

quantity ity

domand on would the priotmiddot ( Lty demand to increacgte as price Tf th(re are knk in the temfll1d

residential is kink

ope fall ow1y

icity depends also unon curve

The Survcy_

on res] ial 10 ciLy watlr resident

and what uses vhen servel by system capi tu is found A

b(- calculated and other aff(c1 ner

obtai n the water fales rate both amI breakdown into demand

essary August lqrG 8 mail survey was lerk munie [pality having water system in the

Heal til lhe [urvey well as of

endorsed by

Allpl Economic s S3J1lVl e form is the appendix

water dmand Hong (115) and (11 ) it wari no t ed exulained decrased with

ons Leaot

ranre flwenLy-fivc hundred lower l I S Census TIureau led

rrwenLy-five thousan(l person was as the c iVi wi public water range wrc incl1Hhd wit-hi n in~11

population of cit may since have fallen below Lwenty-five arown twentv-five thousand

the hundred fLy surveys Minnesota munlcinulit only Lwenty-fi ve were applicahl c this hundred

fi fty-two percent of retllrned However of followup

of medium-~

waleI are

There count less

these variubles water

llmnber inclusion

icant

avall~JbilitV of was 1 i sele~t i nr~ variables ] own 19(0 census Tlrovided Lhe ~_ime constraints compilation of variabl such lot area which would have beerr accurute meaSllrc irr i needs

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

TlrrH()DlICTIONPubllcat~v N

Price

c

~3 bull

nrT

1111shy

vi

in

b7f in

in the

PROCED1TRE

unit ity

rnad_f Pri

]1 =lt -~~ __ J~n

~ fr

3

Ihe Demand for Water

implied in introduction ing LleE is

inc rement of for a quantity of water So demand be coneei veri the several di fferent different bv Fipure I represent the three

is a~)sumed the individual water i obtained AFl and

ReEd

llsinr the

smooth curve

Fi l1esidenti Hater

Prico

quantity ity

domand on would the priotmiddot ( Lty demand to increacgte as price Tf th(re are knk in the temfll1d

residential is kink

ope fall ow1y

icity depends also unon curve

The Survcy_

on res] ial 10 ciLy watlr resident

and what uses vhen servel by system capi tu is found A

b(- calculated and other aff(c1 ner

obtai n the water fales rate both amI breakdown into demand

essary August lqrG 8 mail survey was lerk munie [pality having water system in the

Heal til lhe [urvey well as of

endorsed by

Allpl Economic s S3J1lVl e form is the appendix

water dmand Hong (115) and (11 ) it wari no t ed exulained decrased with

ons Leaot

ranre flwenLy-fivc hundred lower l I S Census TIureau led

rrwenLy-five thousan(l person was as the c iVi wi public water range wrc incl1Hhd wit-hi n in~11

population of cit may since have fallen below Lwenty-five arown twentv-five thousand

the hundred fLy surveys Minnesota munlcinulit only Lwenty-fi ve were applicahl c this hundred

fi fty-two percent of retllrned However of followup

of medium-~

waleI are

There count less

these variubles water

llmnber inclusion

icant

avall~JbilitV of was 1 i sele~t i nr~ variables ] own 19(0 census Tlrovided Lhe ~_ime constraints compilation of variabl such lot area which would have beerr accurute meaSllrc irr i needs

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

in

b7f in

in the

PROCED1TRE

unit ity

rnad_f Pri

]1 =lt -~~ __ J~n

~ fr

3

Ihe Demand for Water

implied in introduction ing LleE is

inc rement of for a quantity of water So demand be coneei veri the several di fferent different bv Fipure I represent the three

is a~)sumed the individual water i obtained AFl and

ReEd

llsinr the

smooth curve

Fi l1esidenti Hater

Prico

quantity ity

domand on would the priotmiddot ( Lty demand to increacgte as price Tf th(re are knk in the temfll1d

residential is kink

ope fall ow1y

icity depends also unon curve

The Survcy_

on res] ial 10 ciLy watlr resident

and what uses vhen servel by system capi tu is found A

b(- calculated and other aff(c1 ner

obtai n the water fales rate both amI breakdown into demand

essary August lqrG 8 mail survey was lerk munie [pality having water system in the

Heal til lhe [urvey well as of

endorsed by

Allpl Economic s S3J1lVl e form is the appendix

water dmand Hong (115) and (11 ) it wari no t ed exulained decrased with

ons Leaot

ranre flwenLy-fivc hundred lower l I S Census TIureau led

rrwenLy-five thousan(l person was as the c iVi wi public water range wrc incl1Hhd wit-hi n in~11

population of cit may since have fallen below Lwenty-five arown twentv-five thousand

the hundred fLy surveys Minnesota munlcinulit only Lwenty-fi ve were applicahl c this hundred

fi fty-two percent of retllrned However of followup

of medium-~

waleI are

There count less

these variubles water

llmnber inclusion

icant

avall~JbilitV of was 1 i sele~t i nr~ variables ] own 19(0 census Tlrovided Lhe ~_ime constraints compilation of variabl such lot area which would have beerr accurute meaSllrc irr i needs

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

Ihe Demand for Water

implied in introduction ing LleE is

inc rement of for a quantity of water So demand be coneei veri the several di fferent different bv Fipure I represent the three

is a~)sumed the individual water i obtained AFl and

ReEd

llsinr the

smooth curve

Fi l1esidenti Hater

Prico

quantity ity

domand on would the priotmiddot ( Lty demand to increacgte as price Tf th(re are knk in the temfll1d

residential is kink

ope fall ow1y

icity depends also unon curve

The Survcy_

on res] ial 10 ciLy watlr resident

and what uses vhen servel by system capi tu is found A

b(- calculated and other aff(c1 ner

obtai n the water fales rate both amI breakdown into demand

essary August lqrG 8 mail survey was lerk munie [pality having water system in the

Heal til lhe [urvey well as of

endorsed by

Allpl Economic s S3J1lVl e form is the appendix

water dmand Hong (115) and (11 ) it wari no t ed exulained decrased with

ons Leaot

ranre flwenLy-fivc hundred lower l I S Census TIureau led

rrwenLy-five thousan(l person was as the c iVi wi public water range wrc incl1Hhd wit-hi n in~11

population of cit may since have fallen below Lwenty-five arown twentv-five thousand

the hundred fLy surveys Minnesota munlcinulit only Lwenty-fi ve were applicahl c this hundred

fi fty-two percent of retllrned However of followup

of medium-~

waleI are

There count less

these variubles water

llmnber inclusion

icant

avall~JbilitV of was 1 i sele~t i nr~ variables ] own 19(0 census Tlrovided Lhe ~_ime constraints compilation of variabl such lot area which would have beerr accurute meaSllrc irr i needs

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

I

011

r-

either get

Only (and di3CU~-scd in

tnL lose thll

Nearly all their sewer

wllilh Chi

on water rnU3t go into thc~ )] nee

tOftl11S

-flVI en 111_

Fi nally tile Waf

((

crlatrd f1(rn

wamiddot broken on Wt)

ld b~r ttl ~~LLVfgtV

~ 11 - r( T)H -j ~ 1L at (1

hc rit 1]1C numr)er

i v dwcll ing~ ~inn)( Lhi rlt~llre

d cuI ](rvCii

i nr j v i diJll

jnvcrsE iT) with consurnrshy

un

LeoL wheLhfr reactin~

rather Lhan the Lh(middot~e uti wa H-cd Tuwns wit h

with quatmiddot her J recci v(~d

Ion

nU-3 i shy(x~)-[ied

I ()(O c by ity ~ ()Wncr-()ccun i cd

y iir(-(- these anr]

A(jain ~nl( pri CP

a

[l ~

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

o f 1l(1l~ 1nf~ Lhr prlt)port i(Jn

hnv(gt

Lhc matpi_lld cnn~um[JL iun WDlll(l

() I-He aTllrtr~ltlls

1 1 L lowtr cnrn-umption a rc nnknowIl he fore

- in la nVClilabJ from CCllU ~

(lur (~ut(p~()r i f~- ctceord inr to

and a hal tudy

llO roe middotht a vc-rarf

aL1 bull mmibe

th

rphc

h~Y which evapotranspiration ~xcc~ds

yClative ne~gtd for irrigation find incluoes tprnpcrature sunlight and wind

incren as the water deficiency inCrei1Scs

in

i V(

watRr Rxnerts have sDCClllatec1 that (~hil

mureit)IS at adults and tend to con~nunc

drtIand tlldy 1969) 1la verified th1 ei l1L(0n years of upp was vtripd bY the

Dr()lotLlol1 uf yOllt11~ The relaLluwhin

T10(leJ Develonment 3[1(1 3taListicn1 Rpsults

t

ltD i L~ anri t be number () r of rcntcd 1101linl~ CLrl 15 a

(lar Irr)m a TnLrl tantl Lhpir waLfr anrl ~cmiddotW(t~ +

rosL Lo trw 1nl1 bE Cxpected

the [act Llal~

IlL il I is

)fc1wV(Y

U)fY Phc re-Itlti-( w(irrht~

Lc L i rJf~ ~

mJinlv USCG i n ~)cleCt irH~ eac l~

sir-nificance of th0 overall model iat ion exnlain0d by thp mo(lel) waf)

overal1 fit of the describinR variables

should be melltioned tha1 the marginal the best Dri~e measure an

meaS1HC~ wc-re tried on] y rr1odc 1s U~C of oLhcr pri~e mCaS1Jres wil] be d

wa~

c

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

i

shy

1 of Variable the Nodel e3timated equat by the squares

Variable Mean n l1ax

q (0

(

-

)

18

a

+

(survey) 321 2280 + 00fl7Y + 69D 3 l)R

Consumption 797 It 1(0 ( ( ) ( ((879)

p 7517 811 )f)~ J~ 49W + 0

( $H100 ) 23( S~lSO 1 ) (110)

Marri are below+ sewer pound49 j90 $150 t1 w

Marginal water $69) Igt Vrlr i are fieant w111) $ Fn) s

CO~it watcr + winter AC 11111w+s TIi

Period x 1 () + 00ilOY +

19( Q]

$) Ie T~O 01)j (000) (Il ( ( (j )

V r )07 (05 000 tlOl

jV (n r

r If

I bull q[)

lt17 0 1

L Tn 9ilr By Lorr Y + Tl

~v via LeI lcnry [J91 + C +

ion of 9 Ji( 1111 C Lon

yTl)r P w

( ( ( 03])

+ 08( Log Y + lJg n E + Log

( ( ( ( + ~~ L - O()9 +

(I)j) I

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

I deleted lopariLhmic model is

4 + Log Performance of the Variables~ w (3 ) ( ( 066) (

[anhave gnificant thelevel is extremely less

001 level ion insilni fi variables not hurt elastic

trhe variashy

deer ieipwy

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

season eXD1_aining water ~

where J)(rcent the clem~nd f)r 1n water

L in L waG due

Phe Effect of Price

ithmi( i l1eorne 1

by thc

thf othpr Drice r water aud spwer in the

averaRcd over the water anri sewer in Lhe winter ]cvcr

based j c

LVJ[l ~)incci L illier ihlL Ihi ((

waLer Inc ielt ion If rrc((nL CX[lCC L cel LrJ llnwlv(c water 1 i ll(~al mud cl by m()rc than

i il

1lh va1 uc ()f

dCfnanri sLuc1 i

undpr hten ypay W1S tlCt dcLctrninHnL ~inc0 thi~-

means that a town half(

conr-umfJL -LCln lnllrr irw n anothpr town chi 1 drcn llorm 11

unclear to the author ltrpcr nroporLi of untts

IIowcvcr

than -cne slncp t t lOln t h Tnlri~ i na 1 for the mean

w+) v

1--t1 Ij1h( ~lVfrarV n f

iYLCrtcd inLo the iyi in lrlC finrrl lincal modeL

d~ the 0(( ] eve rhc 1o~rithrllll

I awl all ellstiritv of -

lo(arithmirmiddot

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

would expect elaEtic incrpAse

However relevant iciLies

prOTlorshylh~ pri~e

In price tional change in directly

by the elifshyThis wi ly by

price behavior be elasshyticity NeverthehClCl in making elast

models ion~ in

has a riignificant e[[et fa1 And (1 s Lanclard

~~~ticities 0encc it ditTers silcnificl1lrLly

aced on

~ o ())-

QJ CJ

middotct

~

f of elasticity

Tt hiriwr

pri

in price may

priees

iciLy estimL-LLc considen(j lower bound

m QJ

(ji + jJ

H QJ

P ill

0

16

ltlJ

Ul Clt H o ~

ltlJ -w

~ ~

Y- I m u

+- ltlJ ~~

+) (J

QJUl I

0

U

0 I

t shyct 0 -J

p ltlJ

-1 M p p

tS

OJ U

po

ltlJ ()

H ~

C) ~

Ul QJ

rl

Ul ()

0

--1 ai s 0

-j

+- () QJ tfl I rJl UJ ()

H U

v v V (f

0 0 M M

cd

ai

c-I ~ ~ bullbull-1 1 ltlJ ai

WXl

+-

5 fi

f bull j

r

r1 ltlJ + Ul ~J

UJ

ltlJ +- ill ~

) (1

lI 0 M

() In 0 c-I

cd ~-

l0

h o m C co

1_

I [0 h

rl- co

C)

ltlJ (J)

I m (J)

0 n

H )-J

()h

Ul D i-r

QJ ()

rlt

rt

n J

()

I

t--shyv 0 c-I

0 ltlJ

J M +-

b C

t1

p middotrl

()

+-

P ell

M l (J QJ p

W

ltL

It

0 ct

0 +

Uj

h QJ

+-) en gt-~

fJ)

0 U-

H q

I 0 f0 -

c-I ill h 0

+) I ai h 0

L~ r tf gt~ middotrl () p () c1 (J rl ())

ltlJ ~ Ul I I

QJ til

+-

rJl I 0 Ul 0 H

U

bull ltlJ - r1

bull n CfJ r

( (Y) () 0 0 0 -1 M

d m ~5

iJ t1j

P ltlJ

gt ltlJ

ltlJ

~ -1 C c-I c-I c10

0 ai ltlJ ~r

0 ill CJ

17

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

~able (Contnued)

amp ~Jorth -6 linear

~~~ac-~ =-965 8~ss-sec- i8DaJ

Average

LiclWcaVe =-2~=- ~~cS -1 - 2~l 319 p r C2

use 29 8urin11ing 1

Cenley ~96i ies -10q ~ CD

Jrir-3 197G 56

~rih cit

Ei~ tnan 197C adnsl

~l~e2r

2imiddot2e rc20e

Pope 1965-71 Soul C~ties varies by Lrt le

~i-1e-serieS - er -price

89- -J -

- l~t)

change yea~

Grunewa_G al ~5J w2~ey ~iS1~ price

p~ Ct=-3vYl

Gardner 1975 ities )~

~ ()

Adapted ~Jong 1970 197C

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

T

However there is some demand function in that the

for the linear model

differenceE~ bull resi(lent inl

model of demand

Hi th s11ch a function is cCnstant length In

y I incar demand fumLion will vary from oer[ect price zero to inflniLe elasticity that price whic11

like thisbe coero The demand eurve for water wII nrohahly r oj these two extreme- [I with some

00 Char ~BS

Quant ity 0 f

fe techn i qur Waf U~(I an arc la shyof its tmciard

of -0(1(

WLy

increJscl inal pric(-- at

~()rCrw(r If the the

a(iJm i t(-(~hniqllc l~ bla~ rcdlletlnrl me-Lhod lrf eJ1imltlng Lanlard error of the 01L

witt 11 Lulrlard errr icity 1 more c1 on Cl~lsticlty at th(gt [reel

incent i V(~S the of nrochJci nrr

pricp of i fllmiddotlin to match an nri (lprnand wIll rise 11th

L kinks was hypothe i zprl was thour-ht to increac

uses utility become feasible the should exi

As

iLy upward from tlll hmiddot

w

Lhl_

ie

pr()u-LCr Lban or Cgt(j I Ul 1 IUPI

d i Frennt from zerO

ic limit

experiment Lrarl [n(iced thCy ~(()m i nu

price ranGe examined

low

were

y MostelJ (~r [ ~ w Li ntizey G and Addison mel

Aronson

Jaininn power of LhQ

Id i ~)

whi(~h cxpl ain Lho data

0 l

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

1

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

31

tCrms

the

present practica11

traditional forms

stability

RA~PE SllRUCTURRf3

from muni evemiddotl~)

Common HCl t e Fa rms

I

fixtutPs ingle bl

j t wle

~vmiddot

fesicll~nt

if

1

ConsumedQuantity

Average

first fmiddotj xtur(-~3

swayed unt are publicly

25

2lr

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

I

Figure 4 Crotal Water Bill as Related to llUJ1ber of Residents and Demand Sector

rotal Water Bill

I

iJJJor more

rrot~ll

Water Bill Ll_I __

nES cern nITl

IJumber of Resldents DOT1anci )(c Lnr

clngle Block Ihth this rate form the orlce ~mlt of rater icc

constant no matter how much wLLer is consuInPcl (Pl~ 11pllr~ I)) lotaJ cost to thegt cu~)tomEr lnCrf~aGC~) wi Lh con-Hunntion fllld t 11prc i~ ill economic Inccntivr to c()n~Crvc Sine there i~3 on-lyshyone nricc this incentive rpmllins ronstnnt Ttthrgt sinpJe hlnrk j s st to match th maqinal cost this rite form can be hoth effici(nt an] e(]uitable Varvin coeet for dirfer(~1t C()nSlD~pr

(] aS~)C~ night mean a variety of ~)inf~lc~ blocks llowpvcr ()f coune t here must be Iome kind [) r meteri n LeFl ~) llCC tJle watrY lJi 11 varles by the amount consumerl

F-il~urp 5 in~le III olk Hat ( Form

l1arginal

Total and Water Averare Bill ~r icc iI I

t-----shyI

k(___ Quantity Quantity

Declining Blocks Under this rate forrJ Ute price uniL cjecreac in a ~tcpwise milnncr w-ith the amount Durchascd (see Pieurc~ r) Il1he consumer pLr~ one nrice or rate level for a certain quanLity of later and a lower nrice for additional ue che total (od of water to the ConSl1Iller increases but at a decreasing rate The incentive for conservation clecreasps as lower and lover rate Jevels are reached

Thi is nrobably the most common rate form use[ by Dublie uti litleS in the e)nl ted ~t3tes today Tt is recommenled by- the American Haterworlc~ Association (IlI-lLq This is a nromotional rate form that was originaJly used by utllities to encourare Irowth in der~and in order to make full use of system capacity crhe current rationale for declining blocks i3 that

26

large customers deserve lower l)rices because of economies of scale in weI] md reservoir construction and because of lower dlstribution costs Tn view of the inreasinr scaritr of high quality water the ramifications of this rate form need to be examiner] more 10se1y

Before any blanket jur]gellents are marIe It should be reJlembered that declining blocl rute tructures can var tremlndously rhe quantities at whlh cllfferent blocks begin are qulte imDortant rhe may be placed so as to cIlcouragr water waste by r-es-iclcntial users or ther may simnlr give a break to extremely large customers An excessivelv large number of block can caueie IlIllHCCssarr confusion and diffluJtv in bi1linr

11hc ratio of hi r11CsL to lowct rate 1 evel] also ronve~JS lnformatlC) about the rate sLrucLure Derlhling bJocks ranrp on a continuum from a verv r](arly sjnl(lc block rate form La blatant subsidizati()n of larre cwshytClIQers Tf Uli ratlo is to be iutifi((j on tIl( economic round of marri na] cu~-~t thln the cot cf (le] i verin~ waLer hould varv hJ I-ll LS

jtlmC rat i () 4

11 LrurC (~ ~)((J itli nf~ Block laLe Ti()rrn

~~~~ I LTarr~i na1

l JLa 1 II Pri

Hater ILlIli 1 j

I

--(~~~-------J

C)l

Qllmt i ty Qllanti Lv

Tncrca~jlnf~ )]uc]rs l[lhis 1 the ()n1)()~)itc of dcclininr-r hlocl in j~lnl

thL nrLc0 r)cr unit jrlCrpC1sPf in a ~)tcpwise ra~-hL()Tl wjth the amount Durchu~)e(l (~-)Ce FLrurc r) The total cOjl- or watcr Lrj(naf~ at llTl incr(~a~~in~ raLe jhc Lnrent ivc to ronprvcgt -incrca~~c~)

hil~her rat lcvel are reached hi rate form is rarely ul by uti lltie Ihe scarclty mac be iucLified since it iOl ]o11b1shyful wtlwr the marrina1 coOlt of nroduct ion rollmls thi Tnttern -lith lower ilistclbulion cot for -Ian cutorJers thcce seem to be erious inequities with this rate fonn lIowvcr the n~o-D(n] I i feJ ine raLe~ whlch offer mi nimal amounts of water at a nominal cost would fall into this rate form

27

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

COnc311Jl1nL

come number of

Figure Inereasing Block Rate Form

Totalunits]lurchased water cnst 375 gallons with ater Bill

11 j np Period how ofleen anJ utility bi1ls wi calculated (1Jart er1y aml1lall y bull pfriurl can bill i blue arC

Quantity

Additional Charges for UtilHy Use

be construed ac charge protection and water hvd rant s In addition

legit imate economtc arllument that all fixd incorporated into thr~ charge and cmrpe which i rJroport 10 water

j variable costs This 1111 bc iscllssel section

rmiddotji

amonnt 0 f wlltor in this rclatively

thollsand faUOlE slICh as ten

lhre an incentive to use thi amount wi 11 be charged for it anyway

first gaLl and up to lhc

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

~ c c c

r C shy~ t- C-

~

C

C

-s

~ ~

c

C ~

~

~

2shy

~

sect c csect E r cC

s gt

~ D

r c- C

lt c C

~ 7

r Cshy

C 0 ~ ~ ~

C

e- S c~ C r~ ~ ~

~~

~ U - ~ ~ 0

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

5

ra-tcs sma] SwmnuY tlr- C

1 Hater

a11- 1 Wabasha 11i (7 1 fhrte1J lJOW La1( Low lO

)Averare iI c-oIccl i

humber Number1

I LPC~ l1 at c hlrrc () I cwcr h

1 7middot00 1) llirh (i r(J c ( no

jOW Lnw It AverrtG~middot

O()

()f 107 r toWtl[

(() a11 JJee 1 I )

i rrllc~) t 11 c)Lo(1 ~cwer Lo HaL(r

1 ville i Il( (t ( 0l[lI9 ~t(n Ci Ly [nw Pruc

Median lt11

Which

~~ () I( naW30n 000 ) (iIOooo CYogtby Crosby New Hope IOOO

000 000 nOD r1dlan )() 000 100

tol1= Numbcr 1(

20

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

~]

~

Vmiddot CJ

c -shyj C

(U (iJ

t

E Q -j

u -shyT

i )

~ L ct ~ ~

L L

-rl

t ~ ~

~ ~~ J

--~ c

L

~

gt i ~

~

-

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

j r( f-Rtlj1lUlCY [lMf FORMS

~o

60 ~~

50 ~ w u

5 - Lt[)

~lO

20

loJ

s

9 I

id t

860

[)[CLl N ING ilLOCK

(t

FREQUENCY [VI TE fORMS (

100

0()

Sile ties

60 01 S

3D

n -

ClIAlGF 1OHfJ1~ FI)HMf (tc-ll)

(

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

+ i Iil C c i

r1 ~

gt

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

01e

lEHER

)

)47 I E ( 19 ashy

)1

It

II ~ 1 f) 1

bull r ~ I

L Tl

I )

()

j(ymmiddot

1 -11 -

1~~ 1(~ i nr~

jI -

r

II -

r -K shyL

were

l]lhi s

demarHl If

JIG

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

gt

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

Price for Water

L

Pri

I

L Quant itshyity

d~ i crirnlnatioll prie

Lt

Cot (urv(-

But syst delayi will exceed

whetmiddothec marginal cost pricing precisely this

expansion is at

Hun Long

~3

moci

T)cak LO~h1 Pric lr~~

Irhc~ not Iac h rlas~-

conner-shy

and rna)

water wou

lTliJrginal

of y

co or of Lhe

y

Hirshlci on

h5

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

the

3~

ir Th i ~~

waLr

-

l

_ ) Hater American

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

llr

1 1000

OC)()

nmcrJ L

Ylr

( 000

rcal

Ul X hr

id il

r

11[i 11 ()flO

1+ bull 00 I

i i

1(1 ()rnlll fn~ I

Tnll

)7 ril(O() l~

~ F)J 1 D[lil Tlnter

Vlm()nLh 00

O~

Lnnal )1 11 ni

~)o ~j

]0 ( r) noo rrt h

(75

tl as

or

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

ity ng W3ter winter

$01 ons i

6

091

r jWr 1 gal

gal

13rtltm

imiddot

we1

ra 1 ~

minirwnn ~ i

(( + 1(5 OOmonth9

Wmonth

no + ( ~)month

r~ haro-(

+ Iil + 90( 100

+ 1 + 11 ill I gal

Ccnmn + q + 1-1 bull i941OIY) L

i~~h + + ~ 11 ~(i 000 gal

(hilT(

t1)1 + + 119 + jiJ

tbull + + (Jrl ~-l 1 )-~ ra1

+ ~~ + 119 + ] 5091000

+ I+ I e)middot + ) Ll0IlD

11 1

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

L of the

i -ffi=-l(-n(

ast

1 llli r Isp prox) i

II

6

from a

the proporshyphLcen

to bo ~he raLher

DC bull )( ul)norL~ that many t waLeI need LeHo 1egtr waLter

f1y wi tlJ i lworn~

iet the th mDTfinal price of water and

Lhoi bills nre f on(~ 1 c~~s uni L

tw f public utilitilS tor which often

and -pwcr be the margi nal servi(e the oldlocophy Lho0 who

pay its ~nLirc One Gu(~h

B Ie Is important Lyrgt1cally be a syetem

a rorollary in~

lie oc1ucaL i swi tch lawn peaK cVt-~ning hours woulll be bencf~L( int bull

watlr preSJllre an(l woumiddot)J 1ay syteme

n concortod [Jnrinkllnr Lo Uw fl

lVO_l (j1 of

T

I

v1ryinr with the rccommCndcci bull

In

~i immn kmand Chflrgcs

0( a serviCe

cncolHn--c Wi1L(~r

ing addj_tinnal iett

lowest

for from cro whieh

1)( used 01 rC i[enL

anl

iec

rei acti c

elastietty contriltlic

~~infe mcLer it i ll(llr1 y water ~~f~) Llm lut rae nlumbi rw f

TlT01TIn Lf( I

whieh be

I d be j ro tncj 1

iiTl l1) tlH~

tfs-irienj

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

----- -------

I

2

B rB)Tlv~ ~jJiv

Afifi n 1-1 ll and V Lewis Bassie WrJt(gt---_----~-----=--=---~L_-_-_-_=-c~ in Illinois Bureau of Economic and Hus of ILLinois Urbana 11 Linois 1969

Ameclcan Water Works Association Management AHWA Nanual is

3 AndQvs Richard A and Martha R llanunond

No3 Hater Resources Research Center University of New Hampshi1e Dllham N H 1970

4 Armenakis A A and G T Peden JL

5 BLake G H E R Allred C H M van Unvel ilnd F D IVhisler Technical

6 Honem Gilbert W On the M3rginal Cost Pricing of Nunicipal Water Hater Resources Research VoL L No1 February 1968 pp 191-93

7

8 Cook R Dennis Detection of Influential Ohslrvution in Linear Regression Technometrics Vol L9 No I February 1977

9 Det(gtrmination of Inter Rate Schedules JOlnn 1 of Americm Jat odes Association March 195t+ pp 187-219

10 Ferguson C E Microeconomic Theory Third Edition lUchard S Irwin llomewoxl illinois 1972

11 Fonrt Louis Forecasting the Urban Residential Demand for ~ater Universily of Chicaeo AgriculturaL Economics Seminar paper unpublished 1958

12 Fox Irving Jnd Orris Herfindahl Attainment of Efficiency in Satisfying Demand for Water Resources Mi1Y 1964 p 203

13 Frey John C (t aI Economics of Jater SU(lply Pimning md Nanagement ReseClrch Pllblication 90 Institute for Research on Land and Water ResourcN Pennsylvcmia State University University Park PH 1975 pp 87-96

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

14 FrisloE Charles W Frederick O Goddard and Nonnm Kieg Afplied Criteria for Nunicipal Water Rate Stnlcttlres Completion Report to the Office of ~ater Resources Research University of Florida Gainesville Fla bullbull 197l

15

16 Cottlieb Mimuel Urban Domestic Demand for Hater A Kansas State Sludy Land Economics Vol 39 1963 PI 20-210

17

~u~~~~~~ H~l ~ Research RCport Hcsearch Institutc University of Kentucky Lexington Ky 1975

18 Gysi Marshall Policies Nebraska Univcrsity 1972

19 Gysi Narshall A Rational Policy for the Energy anu Environmental Crises Vol 11 No3 June 1975 pp

20 Hanke S n and R K Davis Demand Hanagement Through Responsive Pricing Vol 63 No9

21 Ibnke S H Hater Rates An A~)sPssnrent of Current Issues U

JonrI131 01 Americ1n H3ter Works A~sociation2 Vol 67 No5 May 1975 PI 215-219

22 Hines Lawrence G The Long Run Cost Function of Hater Production for Selected Hisconsin Communities l~and Economics FEmiddotbruary 1969 pp 133-140

23 llirshleifel Jack James C De Haven and Jerome Milliman Municipal Hater Rates Remd Corp Santl Nonica

24 Bittman Associates Iuc Price Dcmand Cost and l(eVe1l1( middotin Urban Completion Rq)ort to the OIfice of Hat(~r R(sources

Hollman Kenneth 1-1 and Halter of Primeaux Jr The Effect of Price ~~~~~~~~~~poundi2E~- Jctt(~r Rcsourccs State University Mississippi State

26 Ho11man Kenneth W and Hagne E Boyet An Empirical Analysis of Hater-Price Determinants in Small Hunicipalities ourIl_~()J

May 1975 pp 274-277

27 HOIe Charles H and r P Lineaweaver Jr The Impact of Price on Residential -Iater Demand and its Relation to System Design and Price Structure Resources Research Vol 3 No March 1967 Pl ~

8 James L D and R R Lee Economics of Hater Resource Planning McGraw-HLll New York NY 1971

29 bull

NC

30 Luthi John C Special Considerations in Design of Hater Rates Horks Associalion Vol 55 No3

31 Hilliman Jerome W Policy Horizons fox Future Urhan Water Supply ~and Econ_oillics May 1963 p 123

32 Hinnesota State Planning Agency Related Land

33 Moncur James Analyzing Resources Resfarch 0 f lIlwaii 1975

34 Mosteller F and J W Fukey in Linc1zey G and lL Aronson Psychology Addison anu iesley

~3J North Ronald M The Demand and Price Structures for Hater in a Humid Arca Camp tion Report for the Office of Hater Resources Research (eorgia University July 1969

36 Pillsbury Arthur (ed) ~on ferC[lpoundpound Report No Hater Resources Center California Los Angeles Ca Narch 19 1968

37 Pope Jr Robert N James M StCpp and John S LytIC Effects of

SC 1975

38 Potter Harry R Edward R Cooper and Leonard Z Breen SY~tell1ltic_

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

39 Seell W R D and L Roueche Peak Load Pricing and Urban Hater Management Victoria BC A Case Study Natural Resources Journal Vol 14 1974 pr 383-400

40 Snedecor George W and Hil1iarn G Cochran Statistical Methods0 APPENDIXSixth Edition Iowa State University Press Ames Iowa 1967

41 Thompson Russell G ct a1 Forecasting Hater Demands National Water Commission Arlington Va 1971

42 Tinney E Ray and J ORiordan Hater as a Consumer Commodity Journal of Soil and Hater Conservation May 1971 pr 103-106

43 Tufte Edward R Data Analysis for Politics and Policy PrenticeshyHall Englewood Cliffs NJ 1974 pp 135-163

44 Hare James E anel Ronald M North Price and ConslUllption of Water for Residential Usc in Georgia II Southern Business Summary October 1968 pp 9-13

45 Wong S T A Model on Municipal Water Demand A Case Study of Northeastern Illinoj s ~_=-()1omi~- Vol 48 No1 February 1972 PI 34-44

59

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

UNIVERSITY OF MINNESOTA Department of Agricultural and Applied tconon TWIN CITIES Classroom Office Building

Paul Minnesota 55108

SlRVEY

MUNICTPALITY

are tile average water ion and nwnher service ConntC t ions rllcm

19 i3 W1tLl comllmpt ioo_________ sflvice lion _________

Present watet consumpti sfrvicc connection_______

2 Sinc( we lt1r( concerllfrl d_th llOLlBvhold W1t(r conStlmpti0n j is Cssent 1 tllat we Dear Water Manager know tlw am01l11t vat (1 llltt each S(C lor these f igurcs art not

lablp pI imatc th(Tll and Itknl titem 1S imatps pl~ase statl

We are conducting a study of residential water use in Minnesota Included the tjml per (ll~lrtrlv lonuul) your consumption figln~s

is an attempt to systematically gather data on water and sewer charges for Numhtr Quantitymunicipa1ities in Minnesota In addition we intend to conduct a statis St~rv iCl in (alln1s

tical analysis of water US( in response to price of residential watEOr and Conncc t ions other factors In this way we hope to explain factors which influEOnce residential water consumption in Hinnesota Res i 1

TnstitHt 1 (schools churches etc )We hope that the information derived from this study will be helpful to water utilities in planning future operations The results of the study

COITUTItrc i 11 fvstJuranlltgt et c )will be made available to inUresLed parties

induslr jll It would he1p us to conduct the study if you would be so kind as to answer the enclosed questions to the extent that you have the information available TOTAL

If you have any quest ions on the questionna ire please contact 3 middotfhat arc your Jat(lr InJicate for 3 c if diffcrtnt

Mr Richard I Gardner University of Minnesota Department of Agricultural and Applied Economics 231 Classroom Office Building st Paul Minnesota 55108 Telephone (612)373-1093

A return envelope is enclosed for your convenience

Thank you for your consideration in the matter

Sincerely

~J _

Iifk1f11~4- j (l~ Paul JoKn~6rf Chief Richard L Gar~r Section rlfPublic Water Supply Research Assistant Minnesota Department of Health

Enclosure

Professor

60

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study

-3shy

Have you changed thes( rates in t last (lve years 7 What sorts of treatment does your water receive before delivery bull pJ d~scribe the previous rales and the date

5 What nrc your pr~senl sew~r rot (Indicat for all chwses if different)

8 What are your annual costs of operation (If your cost figures do not categories given ft(l free to combine or change the bnlkdown)

Distribution costs (watltr main maintenance auxiliary pumping etc)

Production costs (pumping chemicals nwintenance)

fit the

Depree ia t i on

Administrative

9 What is your gross annual income from water sal

6 Have you changed these If so please describe

rates in the the previous

last tive yeurs rates and the date of the change

10

11

Would you like a copy

Tit

Address (if different

of the conclusions

from the one

of this study