an analysis of residential water demand and water rates in
TRANSCRIPT
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