Transcript Staying Afloat with Water Revenues Balancing the ebb and flow of revenue stability with conservation Mayors Water Council December 3, 2009 Sandra Ralston Todd Cristiano Malcolm.

Staying Afloat with Water Revenues
Balancing the ebb and flow of revenue stability with conservation
Mayors Water Council
December 3, 2009
Sandra Ralston
Todd Cristiano
Malcolm Pirnie
Water Conservation
A 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
The ‘Ebb and Flow’ of Conservation
conservation
 Rate revenue before
after conservation
Available Capacity
Water Utility
System
 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’
Volumetric Rate Structure Spectrum
Water Budget Allocation:
Domestic (indoor usage)
Irrigation (outdoor usage)
The City of Boulder, CO
implemented a
5-tiered water budget
structure in 2007
Declining
Block
Uniform Block
Rate
Inclining
Seasonal
Flat Rate
Water Budget Basis:
Indoor
people per household
average winter consumption
Outdoor
Irrigable area (square feet)
Evapotranspiration
Budget / Individualized
Flat Rate
Declining
Block
Uniform
Seasonal
Inclining
Block
Budget/
Individualized
Less
CONSERVATION ORIENTATION
More
More
Less
REVENUE STABILITY
Less
More
Rate Structures and Pricing Objectives
 Rate structures and prices should be designed to:
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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 Models
Capturing the Moving Parts
Reduced
O&M
Delayed Capital
Expansion
Additional
Source of
Supply
Inclining Block
Structures
Budget-Based
Rate Structure
Pricing
Objectives
Reduced
Revenues
Rate
Increases
Revenue
Instability
 Dynamic modeling tools
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“What if” scenario analysis
Optimization of variables
Real-time analysis with Stakeholders
Results summary dashboard
Flexible and updatable
Addressing Conservation Challenges
Rate
Increase
??%
Consumption
5%
Delayed CIP
2009
2013
Rate
Increase/
Decrease
??%
Rate Structure
Change
Customer
Bill
Impact
??%
AThe
successful
conservation
program promotes:
Conservation
– Revenue
Stability
Sustainable
Balance water resources for future generations
Sustainable financial viability
Dillon Reservoir
2009
Summit County, Colorado
Discussion
Sandra Ralston
Principal Consultant
Charleston, SC
[email protected]
843-853-7140
Todd Cristiano
Senior Consultant
Denver, CO
[email protected]
303-316-6541