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Water Utilities Missing Opportunity to Stretch Water Supplies

Very few water utilities are utilizing water connection charges to increase water-conserving residential development projects, according to a report by Western Resource Advocates, Ceres, and the University of North Carolina’s Environmental Finance Center.

The report, Water Connection Charges: A Tool for Encouraging Water-Efficient Growth, evaluated water connection charges used by 800 public water utilities in Arizona, Colorado, Georgia, North Carolina and Utah. It found that 93 percent of the fee structures in the Southeastern states and 62 percent of the fee structures in the Western states used uniform water connection charges for single-family homes that took no account of key factors in influencing the design of a home’s water footprint. As a result, owners of new homes are typically paying the same amount to be connected to local water systems despite wide-ranging differences in their water use.

The report found that 10 percent of the 800 local water utilities, most of them in water-parched Colorado, are including water-saving incentives in water connection charges, and initial results show how effective these are at shaping different developments. In the case of Aurora, Colorado, the state’s third-largest municipality, five of six new developments coming on-line since 2014 used “zero-water” landscaping in order to get a 100 percent refund on their connection charges.

Numerous studies have been done on how U.S. water utilities should price the volume of water being sold to customers monthly in order to incentivize efficiency. Far less research has been focused on how to determine water connection charges – typically the cost of the actual physical connection to a water system, plus costs for developing new capacity to serve the customer – to influence development behavior.

The report analyzes water connection charges in five fast-growing states which are all experiencing varying degrees of water scarcity and resource vulnerability, thus making them more likely to have connection charges designed to influence future water demand. Researchers evaluated 450 rate structures in North Caroline, 290 in Georgia and 60 from three Western states (20 each in Arizona, Colorado and Utah.) The report looked at which factors were used by utilities in determining their water connection charges, such as lot size/irrigated area; types of landscaping (such as low-water-use plants vs. turf grass); efficiency of water fixtures; and house size/ number of bedrooms/bathrooms. The report includes four case studies showcasing the effectiveness of multi-factor water connection charges in changing behavior.

The report recommends utilities consider using multiple factors to determine the connection charges to drive water efficiency and capture the costs of new development. The report also recommends mechanisms to ensure longevity of water savings and suggests utilities fully engage customers and developers in designing new connection charges.

A study published last month by Western Resource Advocates and McKinstry found that Western states’ public schools and governments can save $859 million annually by using performance contracting to implement water management and energy conservation measures.

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2 thoughts on “Water Utilities Missing Opportunity to Stretch Water Supplies

  1. What’s totally surprising about this survey is that the majority (62%) of utilities in the much drier Western states are still stuck in the mindset of using the older, more wasteful methods of water connection charging. I guess old habits die young.

  2. Utilities in other places such as Auckland New Zealand, charge both a connection fee and a consumption charge. In addition, wastewater is charge based on a percentage of the water consumed. Combined these change behaviours.

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