Water utility eyes rate hikes to promote conservation

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A ban on lawn watering and other non-essential uses figures to be Citizens Water’s most effective tactic to conserve water during future droughts, its newly released water-conservation plan shows.

But the utility is also considering “conservation-based” rates to discourage usage on peak days in future years.

Such rates, which would be higher for those using the most water, are among recommended measures in a conservation plan Citizens filed this week with the Indiana Utility Regulatory Commission.

The plan sets a savings goal on peak usage days of 23.9 million gallons per day by 2015, and 28.6 million gallons per day by 2020.

“This evaluation results in an aggressive, yet realistic, expectation of potential savings and impact on forecasted demands,” states the filing.

That amount excludes water savings from bans on lawn watering and other non-essential uses, which could save 81.5 million gallons on a “peak day” by 2020, the utility estimates.

Rather, Citizens sees the next biggest potential savings —13.5 million gallons a day by 2020 — as the result of consumer-education efforts to encourage conservation.

That’s followed by a 5.2 million-gallons-a-day savings from a new rate structure that would provide a financial incentive for customers to ease back on water use.

Such conservation-based rates could take the form of seasonal rates, excess-use charges and tiered rates that increase as customers use more water. That could have big effects on major water users such as golf courses, which can draw vast amounts of water for irrigation.

Such users could even be put on interruptible status, where water is shut off for a short time when the system is under the most strain.

“These rate structures will be evaluated as part of the cost of service/rate design study to be conducted in Citizens Water’s next rate case,” states the filing.

Citizens’ next water rate case is set for the first half of 2013.

“The idea is to encourage [customers], through price signals, to conserve,” Jake Boomhouwer, an engineer with Camp Dresser & McKee, told the Board of Waterworks last year.

The approach is different than the current one, in which rates are structured to decline on a per-cubic-foot basis as a customer uses more water. But many utilities are moving away from that type of payment model. Nearby Louisville, for one, adopted conservation-based rates last year.

CD&R said a conservation-based rate structure could even lower rates for lower-volume residential users.

Higher-volume commercial water users would be hurt by such a rate structure. Right now, the biggest water users pay less than half the per cubic-foot rate than the smallest users.

One way to alleviate such strain could be to establish the average water consumption amount used by a business on an annual basis and then raise rates only when they exceed such usage.

Indianapolis might need to upgrade its current metering system before it can apply more sophisticated billing schemes, CD&R said. These include automated meters, which in some cities are capable of taking water-use readings every six hours.

Retrofitting a city the size of Indianapolis with smart water meters could cost in the range of $40 million to $80 million, the engineering firm said last year.

At the same time, the utility has had success in dealing with drought conditions this summer without such costly upgrades.

On July 13, Mayor Greg Ballard declared a ban on lawn irrigation and, within 24 hours, system demand plummeted by about 40 million gallons a day.

The peak daily usage during one day in July was 233 million gallons.

Citizens has explored increasing its water supply. Among long-term ideas are building pipelines to tap water in the Ohio and Wabash Rivers. Such projects could cost hundreds of millions of dollars, however.

About 75 percent of Citizens’ water comes from surface supplies such as Geist, Eagle Creek and Morse reservoirs. Levels have fallen by more than 5 feet in some places this year during the drought.

The rest of the city’s water supply comes from well fields.



  • This is appropriate
    The next increment of supply will be very expensive so it's appropriate to pursue educational, price-responsive and efficiency measures to shape demand.
  • Think outside the resevoir
    It seems to me, it would be great to see CW start to encourage creative use of "grey" untreated water for use on lawns, corporate sites, and golf courses. Right now, if I water my garden I am using the same water I use to drink. Maybe those that seek better ways to capture and reuse grey water could see a price break or incentives to invest in such plans. Maybe it is time to return to cisterns and wellsespecially when the water wont be consumed.
  • Hosed
    Citizens did not pay the City anything. The ratepayers, after being hosed by auction-rate bonds, Veoila and PILOT payments also had to pay tribute to The Great McGinty. We, the actual citizens, are on the hook to pay back the borrowed funds.
  • More Greed
    When citizens gas took over the water company they created a monoply. A monoply's last consideration is the citizens it serves. Time to drill a well and sink aseptic tank.
  • Meter reads
    They start reading every meter each month on October 1st.
  • Policies
    Why doesn't Citzens actually implement some conservation POLICIES instead of screwing the "Citizens" Most of us don't realize how luck we are not to deal with some of the crazy conservation rules in the West - but we could borrow a few. Why doesn't Citizens, create a TIERED approach to conserving water. Did you realize we had no in between in our water usage options this year? It was either 1) please cut back - we haven't had rain 2) were at a voluntary ban, to 3) QUIT USING WATER! There could be some rules to prevent a flat out ban such as alternating which houses can water, rotation schedules, leveled band on certain uses before a full out ban. Lets try actually running the business, being smart and strategic instead of just saying - thats too complicated - lets just charge them more- that will slow it down........
  • Big Questions
    Several questions: Didn't Citizens get a deeply discounted price in a no bid contract from Mayor Ballard for the water utility with promises that Citizens would make large infrastructure investment with the savings? What happened to all the tens of millions of annual operating costs savings promised by Citizens? Is Citizens saying corporate users are paying too little for water compared to households with this new pricing Increase request? Why do we have water shortages every summer for at least the past five years? Why haven't regulators addressed supply problems when they reviewed Citizens purchase of the water utility?
    • This is Stupid
      We are already scheduled to have increased water and sewer rates because the city failed to invest in infrastructure to comply with EPA mandates and increased water demand over the past 10 years. Now there solution is mandating water bans, education programs to tell us to use less water, and more pricing increases with no additional infrastructure investment to keep up with increased demand. This is stupid and they have failed if they continue to have service interruptions and simply can get supplying water to our community.
    • Conservation
      Rick, if the purpose of the rate increase is to encourage conservation, then setting the lowest price tier at what is now the current highest usage would be meaningless, as it would simply encourage water usuage at the current level for the highest users and also encourage those users who currently use less water to increase their usage up to the current highest usuage rate. The purpose of the price increase would be to get customers to use less water, not more. So, for a proper tiered-rate, you would want to increase the rate on current high users, most of which are water-intensive businesses, and encourage them to decrease their water usage.
    • Water utility eyes rate hikes
      When is the water company going to start reading meters on a montly basis? Estimating usage on a fictitious number from several years ago is hardly the way to do it.
      • Tiered Rates
        If CW goes to tiered rates I'm sure they will set the bottom rate for consumers to start at the what is now the current rate for low water usage. Fairness would dictate the bottom rate would start at what is now the high water use rate and rise with usage. "Citizens" Water will see this as an "opportunity" to re-align their pricing structure (using words such as "future", "conservation", "long-term capacity") thus us consumers are going to get screwed while the leadership get fat bonuses and raises for being so smart (aka opportunistic). Them getting theirs is their definition of "fairness"!

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