staying afloat with water revenues balancing the ebb and flow of revenue stability with conservation...
TRANSCRIPT
Staying Afloat with Water RevenuesBalancing the ebb and flow of revenue stability with conservation
Mayors Water Council
December 3, 2009Sandra Ralston
Todd Cristiano
Malcolm Pirnie
Water ConservationA Necessity for Sustainable Utilities
1% of world’s water supply suitable for consumption
Water shortages projected for 36 states with next 5 years
Conservation programs can be an effective tool in protecting vital resources and minimizing costs
BUT Conservation-based rates can
affect the stability of water revenues
Water Utility System
The ‘Ebb and Flow’ of Conservation Rate revenue before conservation Rate revenue after conservation
Reduced consumption leads to: Potential revenue instability Rate increases “I use less, and my bill goes up!”
Reduced consumption also leads to: Capacity benefit – Delayed expansion projects Reduced O&M ‘Doing more with less’
Available Capacity
Volumetric Rate Structure Spectrum
CONSERVATION ORIENTATION
Flat Rate Declining Block
Uniform Seasonal Inclining Block
Budget/
Individualized
Flat Rate
Declining Block
Uniform Rate
SeasonalInclining Block
Budget / Individualized
The City of Boulder, CO implemented a
5-tiered water budget structure in 2007
Water Budget Allocation:Domestic (indoor usage)
Irrigation (outdoor usage)
Water Budget Basis:Indoor
people per household average winter consumption
OutdoorIrrigable area (square feet)
Evapotranspiration
MoreLess REVENUE STABILITYMore Less
Less More
Rate Structures and Pricing Objectives
Rate structures and prices should be designed to:• Provide a sufficient revenue stream• Easy to understand/transparency• Equitable• Legally compliant• Meet utility-specific policy goals and objectives
- Provide stable revenue stream- Sustainability/Conservation goals/Education- Low income/Affordability- Growth pays its own way- Minimize impact to large volume customers
Selected pricing policies can have conflicting objectives!
Conservation Planning ModelsCapturing the Moving Parts
Delayed CapitalExpansion
Reduced O&M
AdditionalSource of
Supply
RateIncreases
ReducedRevenues
Revenue Instability
Inclining BlockStructures
Budget-BasedRate Structure
PricingObjectives
Dynamic modeling tools• “What if” scenario analysis• Optimization of variables• Real-time analysis with Stakeholders• Results summary dashboard• Flexible and updatable
Addressing Conservation Challenges
Consumption 5%
Rate Increase
??%
2009 2013
Delayed CIP Rate Increase/Decrease
??%
CustomerBill
Impact??%
Rate StructureChange
The Conservation – Revenue Stability Balance
A successful conservation program promotes:Sustainable water resources for future generations
Sustainable financial viability
Dillon Reservoir 2009
Summit County, Colorado
Discussion
Sandra RalstonPrincipal ConsultantCharleston, [email protected]
Todd CristianoSenior ConsultantDenver, [email protected]