Connecticut Public Interest Law Journal
Utilities are challenged with the task of meeting future water demands while generating revenue through the use of the resource. Customarily, utilities base demand projections on subsequent use and calculate price on past consumption. The traditional model of extrapolating cost, based on past consumption, does not allow the utility flexibility to protect the resource in times of crisis. In recent years, water resources have been taxed by population increases and changes in weather patterns. Utilities encourage the use of water at low fees and are unable to conserve during times when the resource is available and cheap. This ineffective rate structure does not properly account for the true cost of supplying water to communities over the long term.
A focus on sustainability requires utilities to include value-based pricing that reflects the true cost of the service. Utilities must adopt more complex demand projections that include future considerations and prior use. More accurate projections allow the utility to properly value water and sends the proper price signals to consumers. Increases in price during droughts are to be expected, the adoption of base and tiered rate structures allow the utility to generate sufficient income to maintain its services and plan for the future, while properly charging users who consume the most water. Adopting more complex pricing structures persuades the consumer by rewarding conservation and moves away from outdated flat rate structures which entitle consumers to use without charging for the volume. Proper pricing of water encourages long-term conservation and resilience for utilities providing water at reasonable rates, while allowing communities to grow in harmony with their environmental needs.
Amy Hardberger, Put Your Money Where Your Water Is: Building Resilience Through Rates, 15 Conn. Pub. Int. L.J. 37 (2016).