Do the rates promote conservation?
At Monday's Richardson city council meeting, resident David Chenoweth
suggested (Section 5, Part 3, beginning about 28:30) that the city's
water rates do not promote conservation. Does he have a point? I think
so, at least enough of a point that someone at city hall ought to
review the situation and decide just what we're trying to accomplish
with the rates. According to the city's Web site, the
water rates are:
Minimum $7.00 plus per each 1,000 gallons consumed
$2.95 for 1,000-11,000 gallons
$3.19 for 11,001-20,000 gallons
$3.33 for 20,001-40,000 gallons
$3.87 for 40,001-60,000 gallons
$4.05 for 60,001 and over
At first glance, it looks progressive, that is, the bigger consumers
of water pay higher rates. But David Chenoweth pointed out that that
$7.00 minimum charge skews things quite a bit. For example, if you
conserve and use only the barest minimum of water for a month, say
1,000 gallons, you'll pay $9.95 for that 1,000 gallons. Say your
neighbor uses four times as much water as you, 4,000 gallons. His
total bill will be only twice as big as yours, a total of $18.80.
That's only $4.70 per 1,000 gallons, less than half your effective
rate of $9.95 per 1,000 gallons. For even bigger consumers of water,
that $7.00 minimum charge gets spread over many more gallons, bringing
their effective rate per 1,000 gallons ever lower. Eventually, at
35,000 gallons usage, it bottoms out at $3.37 per 1,000 gallons
(remember, the extreme conserver paid $9.95 per 1,000 gallons). It's
not until 40,000 gallons usage that those higher rates for big users
take over and the rate per 1,000 gallons starts creeping upward again.
Here is the same table again, only this time showing the effective
rate per 1,000 gallons.
$9.95 per 1,000 gallons for 1,000 gallons
$6.45 per 1,000 gallons for 2,000 gallons
$5.28 per 1,000 gallons for 3,000 gallons
$4.70 per 1,000 gallons for 4,000 gallons
$4.35 per 1,000 gallons for 5,000 gallons
$4.12 per 1,000 gallons for 6,000 gallons
$3.95 per 1,000 gallons for 7,000 gallons
$3.83 per 1,000 gallons for 8,000 gallons
$3.73 per 1,000 gallons for 9,000 gallons
$3.65 per 1,000 gallons for 10,000 gallons
$3.59 per 1,000 gallons for 11,000 gallons
$3.41 per 1,000 gallons for 20,000 gallons
$3.38 per 1,000 gallons for 30,000 gallons
$3.37 per 1,000 gallons for 40,000 gallons <--- lowest rate
$3.47 per 1,000 gallons for 50,000 gallons
$3.54 per 1,000 gallons for 60,000 gallons
$3.60 per 1,000 gallons for 70,000 gallons
The council members understood what was happening here. City Manager Bill Keffler quickly
identified that minimum $7.00 charge as being responsible for the high
unit price paid by conservers of water. He said that there's
a minimum $7.00 charge just because it costs something to connect
people to the water system no matter how little water they use.
That's true enough. But so what? If the primary goal is to conserve
water, then the city should eliminate that minimum charge. The rates
for usage can be adjusted upwards to keep the change revenue neutral in total.
If the goal is conservation, then residents should be charged only for
the water they use and the effective rate should go up with increased
usage, instead of down as the current structure has it.
But perhaps that's too radical. Perhaps the council feels there's a
fairness issue here (although Bill Keffler did not say so in his
response to David Chenoweth). Perhaps the council wants everyone to
pay that $7.00 because that's the cost of just maintaining the pipes,
before any water runs through them at all. Fair enough. Then, they
should at least adjust the rates so that the unit rate per 1,000
gallons bottoms out at much less than 35,000 gallons usage per month.
Lower the rate for the first 11,000 or 20,000 gallons and increase the
rate for usage over 20,001 gallons. Again, adjust the rates to keep
the change revenue neutral, but set the rates so that the bigger users
pay more, not just in absolute dollar amounts, but in the effective
rate per 1,000 gallons as well.
All this is dependent on the assumption that the goal is to
conserve water. Bill Keffler implied that was the goal of the rate
structure, but there are two reasons why that might not be the only
careabout driving the rate structure. First, council members may want
to actually favor the bigger users of water for various reasons, or at
least not be seen as penalizing them. More importantly, the city
contract with the North Texas Municipal Water District (NTMWD)
guarantees the city will buy from NTMWD a given amount of water each
year. Conservation below that contracted minimum won't result in any
cost savings for the city at all. There might be more global reasons
why water conservation would still be a Good Thing™, but the
city council might not care as much if it doesn't save the city any
money directly.
In summary, David Chenoweth did have a point. The city's goals in
this area ought to be reviewed and clarified, then the water rates
themselves ought to be reviewed and adjusted if necessary to better
impact the city's goals.
Labels: government, Richardson
