The Value of Water
Texas Panhandle-High Plans Water Conservation SymposiumFebruary 12, 2014 Amarillo, Texas
Mary Ann DickinsonPresident and CEO
US is the Best Deal of All
Average American uses 100 gallons/day/person The American household spends, on average, only
$523/year on water and wastewater charges, in contrast to an average of $707/year on carbonated soft drinks and other beverages
US has the lowest burden for water/wastewater bills as a percentage of household income, compared to other developed countries
http://water.epa.gov/infrastructure/sustain/Water-and-Wastewater-Pricing-Introduction
EPA Report
Every sector of the U.S. economy influenced by water
But reliable information on the economic importance of water is scarce
The relationships between Energy/Water/Food accounts for more than 94% of off-stream water use nationwide.
http://water.epa.gov/action/importanceofwater
Elements of Water Value
Quantity – The total volume of water the source can supply
Time – When water will be supplied Space – The location at which water
will be supplied Reliability – The likelihood that the
supply will not be interrupted Quality – The extent that water is
free of contaminants and suitable for the intended use
Value Difficult to Measure
Public supply and domestic self-supply: $1 to $4,500/AF
Agriculture: $12 to $4,500/AF Manufacturing: $14 to $1,600/AF Electric power generation: $12 to
$87/AF Hydropower: $1 to $157/AF Mining and energy resource
extraction: $40 to $2,700/AF Value to the economy
Residential Water Sales (National Association of Water Companies)
0
50
100
150
200
250
300
350
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Trends in consumer prices (CPI) for utilities [1978 to 2009]
Garbage
Cable/sat. television
Water and sewer
Fuel oil
Natural gas
Local phone
ALL ITEMS (CPI)
Postage
Electricity
Internet (1997=100)
Wireless (1997=100)
Interstate phone
Beecher IPU-MSU
U.S. Water and Waste Water Tariffs
13.7%
5.1%
12.3%
6.5%
8.8%
7.2% 7.0%
12.3%13.0%
3.5%
10.1%
7.9%
12.1%
7.8%
15.1% 14.2% 15.0%
4.7%4.5% 4.9% 4.6%
7.1%
10.9%
-0.9%
-4.0%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
1998 2000 2002 2004 2006 2008 2010 2012
Survey Year (all assumed to be Jan. 1, except 2008-2012, which is July 1)
% R
ate
Cha
nge
Water Wastewater CPISource: Raftelis
The Drivers
Reduced demand from efficient fixture replacement under the plumbing and appliance codes
Reduced demand from active conservation programs
Reduced demand from the recession: industrial shift layoffs, home foreclosures
Reduced peak demand because of weather Need to maintain/renovate infrastructure Inflation Rise in fixed costs
Outdoor water use is lower Water suppliers then complain about not selling
enough water to meet fixed costs The costs avoided by the utility from conservation
get forgotten in the drive to sell excess capacity Consumers expect the water bill to go down not
up when supplies are available We need properly designed rate structures to
stabilize systems
And in Wet Years?
The Political RealityWe don’t like to revise our rates It is politically unpopular, so rates are
changed as little as possible The inevitable inflationary increase is
postponed until it is a crisis, much less increases in other costs
Conservation is often blamed for financial challenges – even when there are no active conservation programs in place!
This sends the wrong message to consumers
And Conservation?Conservation is still part of the solution It is a long-term cost reducer to the utility Revenue loss is often due to other drivers Every gallon saved is water that does not have
to be pumped, treated and delivered Conservation is an investment and short-term
effects must be planned for Reduced utility costs generally mean reduced
customer rates in the long-term due to avoided infrastructure
Yes, Systems Are Still Growing
2006 EPA Study showed that 52.6% of community water system capital improvement expenditures were for expansion, not just repair and replacement
Conservation programs help reduce expansion costs and stretch supplies
Long-term planning is critically important
Efficiency Saves Consumers $
0
5
1 0
1 5
20
25
20 00 201 0 2020 20 30 20 40
YEAR
PEA
K D
EMA
ND
/CA
PAC
ITY
(mgd
)
Existing Capacity
Required Capacity Before Conservation
DELAY
DOWN SIZIN G
Ba se l in eD e m a n d A f t e r Co n se r v a t io n
Model Navigation Worksheet
What’s Next at AWE?
AWE is developing solutions to assist water suppliers to set water rates that help: Provide clean drinking water at rates that are
fair and affordable for customers today and in the future
Support long-term financial sustainability of water systems and utilities
Stretch and protect water supplies to fuel growing, urbanizing and industrializing communities
Westminster’s Story Citizens complained about being
asked to conserve when rates would just go up anyway
Westminster reviewed marginal costs for future infrastructure if conservation had not been done
Since 1980 conservation has saved residents and businesses 80% in tap fees and 91% in rates compared to what they would have been without conservation
Report posted on AWE web site at www.a4we.org
http://www.nytimes.com/2014/02/09/us/texans‐answer‐call‐to‐save‐water‐only‐to‐face‐higher‐rates.html
Our Consumers are Often Clueless
They are not aware of how much water they actually use (and their ignorance is worse without meters)
They complain about the cost of tap water when they are willing to pay a thousand times more for the same litre in a plastic bottle
They have no idea how the system is run and the nature of the system costs
Engaging the Customer Educate them about the magnitude of their own
water use Make them stewardship partners in the water
resources of their communities Involve them in utility discussions to create a
basis for support for the final decision Put community leaders on Advisory committees
so that they participate and review the costs and strategies
Develop support for efficiency programs like NRW through a better understanding of data
One Option Water budget-based rates are found to be the most
equitable rate structures The revenue requirement based on the budgets,
not the actual consumption This means predictable, low bills for customers that
conserve Customers exceeding their budget pay more, with
the penalty revenue used to fund conservation programs
Because the water utility is made whole by collecting its needed revenue on the budget baselines, it does not lose money when customers conserve