water budgets and rate structures - innovative management tools william b. deoreo, p.e., m.s....
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Water Budgets and Rate Water Budgets and Rate Structures - Innovative Structures - Innovative
Management ToolsManagement Tools
William B. DeOreo, P.E., M.S.
Aquacraft, Inc.Boulder, Colorado
www.aquacraft.com
Project Sponsors and ParticipantsProject Sponsors and Participants• AwwaRF (tailored collaboration
grant)• EPA• California Urban Water
Conservation Council• City of San Diego Water Dept.• EBMUD• Pinellas County Utilities, FL• Scottsdale Water Res. Dept, AZ• San Juan Capistrano, CA• Jordan Valley WCD
• Irvine Ranch WD• Otay WD• LADWP• Las Vegas Valley WD• Portland, OR• Scottsdale, AZ• City of West Jordan, UT• Town of Cary, NC• Boulder, CO• Centennial Valley WSD, CO• Marco Island, FL• City of Santa Barbara
Project TeamProject Team
Aquacraft, Inc.
Peter Mayer, Bill DeOreo, Leslie Martien
A&N Technical Services, Inc.
Tom Chesnutt, David Pekelney
Lyle Summers
Goals and ObjectivesGoals and ObjectivesEverything you always wanted to know about water budgets,
but were afraid to ask. What are water budgets How do they work What are their advantages and disadvantages How they have been implemented Improved program designs that could be implemented in
the future What information and billing technologies are required How they can be used to improve utility resource
management How they can be used to help manage demand within a
drought crisis
Prevalence of rate structures in Prevalence of rate structures in United States United States
Rate Structure Residential Non-Residential
Uniform 37.2% 45.9%
Increasing block 29.1% 17.6%
Decreasing block 30.4% 33.1%
Other 3.4% 3.4%
Adapted from Raftelis 2002. Adapted from Raftelis, 2002
What are Individualized Rates?What are Individualized Rates?• AKA water budget-based, goal-based, and
customer-specific rates• A type of block rate where the block definition
uses one or more customer characteristics:• Number of persons per household
• Lot size,
• Evapotranspiration needs of landscape
• A lower/higher rate is set for levels of water use less/more than the block definition
What are Individualized Rates?What are Individualized Rates?Rate/unit
Units
Higher Rate
Lower Rate
WaterBudget
Why use Individualized Rates?Why use Individualized Rates?• They have been implemented in communities
facing limited supplies/shortages• Seen as an equitable way to share limited
supply while preserving choice• “Fairness” cited as its greatest advantage• When the basis for the individualized rate is
communicated well, they are seen as intrinsically more equitable than rates that ignore customer characteristics
Why use individualized rates?Why use individualized rates?For the customer• Improved linkage between who causes costs and who
pays for them (Cost of Service)• Better information to make consumptive decisions
For the utility• Practical method to handle supply limitations• Dedicated funding for cost-effective conservation• Decreased demands can lower future costs• Lower costs reduce revenue requirements• Improved cash flow stability
Implemented Water Budget Implemented Water Budget ProgramsPrograms
Utility Location
1 IRWD Irvine, CA 2 Otay Water District San Diego, CA 3 Capistrano Valley WD San Juan Capistrano, CA 4 City of Boulder Boulder, CO 5 LADWP Los Angeles 6 Town of Cary Cary, NC 7 City of Morrisville Morrisville, NC 8 SDCWA San Diego, CA 9 Marco Island Marco Island, FL 10 San Clemente San Clemente, CA 11 Monterey District Tarrif Area Monterey, CA 12 City of Castle Rock Castle Rock, CO 13 Las Vegas Valley Water District LVVWD 14 Centennial Water & Sanitation District Highlands Ranch, CO 15 Santa Rosa Santa Rosa, CA 16 Eastern MWD Los Angeles metro area 17 Lake Arrowhead S. California 18 City of Aurora Aurora, CO 19 Southern Nevada Water Authority Las Vegas, NV 20 Contra Costa Water District Contra Costa, CA 21 City of Rohnert Park Rohnert Park, CA 22 City of Santa Barbara Santa Barbara, CA 23 City of Fairfield Fairfield, CA 24 City of Albuquerque Albuquerque, CA 25 EBMUD Oakland, CA 26 Salt Lake City Dept. of Public Utilities Salt Lake City, UT
Summary of Implemented Water Summary of Implemented Water Budget Rate StructuresBudget Rate Structures
Type of Water Budget Program Number of Utilities Implementing
Complete (all/most customer accounts) 3
SF Residential and Irrigation Accounts 7
SF Residential Accounts 3
Irrigation Accounts 5
Golf Courses 2
Informational 5
In process/pending 2
Is Water Consumption Affected?Is Water Consumption Affected?
Irrigation Rate (inches/acre)
Period Otay Irvine Capistrano Valley
pre ‘88-’90 Average 28.71 52.16 28.35
post ’90 Average 23.05 32.78 18.45
Difference -5.66 -19.38 -9.90
Percent Change -20% -37% -35%
Landscape Water Budget-base rates: pre-post consumption
Is Water Consumption Affected?Is Water Consumption Affected?
Irvine Ranch Water District – staff concluded water budgets increased outdoor efficiency by 60%.
1992 – 52.8 inches of water applied across 3,600 irrigable acres in service area.
(Turf grass requirement = 48 inches).
2005 – 20.4 inches of water applied across 11,768 irrigable acres in service area.
61% reduction.
Is Water Consumption Affected?Is Water Consumption Affected?
Centennial Water and Sanitation District in Colorado documented an average 25% reduction in demand after implementing a water budget program.
Even though Centennial continues to add customers, its demand has decreased 18 – 31% starting in 2003 when the water budget-based rate structure was implemented.
Are individualized rates perfect?Are individualized rates perfect?• Imperfect from a
conservation/efficiency perspective• By “grandfathering” existing landscape
choices, water budgets can give insufficient incentives to change those choices over the long-term
• This imperfection increases the political implementation feasibility
Designing Water BudgetsDesigning Water Budgets
• Water budgets are useful in their own right for conservation program targeting
• Who are the inefficient users?• Utilities that can identify customers most in
need of assistance (targeting) will improve the cost-effectiveness of customer outreach
See “Improved Program Targeting,” Socioeconomic Impacts of Conservation Programs, AwwaRF 2001, Beecher et al., page 115.
Water Budgets and Drought Water Budgets and Drought ResponseResponse
Water budgets and water budget rate structures offer water utilities powerful new tools for reducing demand during drought and for monitoring customer compliance with drought restrictions.
Case Study: San Juan CapistranoCase Study: San Juan Capistrano
Tier Cost per CCF of water
Tier I: Use up to 100% of the allocation $2.27 per ccf
Tier II: Use up to 200% of the allocation $2.91 per ccf
Tier III: Use greater than 200% of allocation $4.85 per ccf
•Lots under 7,000 sf given same allotment based on 3,636 sf irrigable area. •Lots greater than 7,000 sf given individualized water budget based landscape area. •Single-family indoor allotment = 9 ccf (6.7 kgal) per month•Multi-family indoor budget is 6 ccf (4.5 kgal) per month.
Case Study: Centennial Valley Case Study: Centennial Valley Water and San. DistrictWater and San. District
% of Budget Rate ($/kgal)
0 – 100% $2.50
101 – 120% $3.45
121 – 140% $5.20
140%+ $7.80
Fixed monthly fee $12.50
Case Study: Centennial Valley Case Study: Centennial Valley Water and San. DistrictWater and San. District
Aerial photo analysis.
Key Study FindingsKey Study Findings
• Water Budgets are Being Used Across the USA• Water Budgets Can Meet Cost of Service
Requirements• Water Budget-Based Rate Structures, Like
Utilities, are Unique• Landscape Water Budgets Are Most Frequently
Implemented• Capable Utility Billing System and• Customer Level Data REQUIRED
Key Study FindingsKey Study Findings
• Implementation Costs Vary• Water Budget-Based Rate Structures Spur
Conservation Savings• Most Water Budgets Are Seen As “Fair”• Landscape Penalty Rate Structures Are Less
Successful• Water Budgets Offer Great Potential as a
Drought Response Tool
For More Information….For More Information….
Published report from AwwaRF – Fall 2007
Journal article – publication date unknown
Contact - Peter Mayer, or Bill DeOreo
Thank you!