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The South Platte Reservoir has the capacity to hold more than 6,400 acre-feet of water and serves as one of the district's major raw water storage sites. Photo: Centennial Water & Sanitation District
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A geologist walks through a 1.5 mile tunnel that connects to a series of five collector wells to reach cleaner source water. The project went online in September. Photo: Louisville Water Co.

SOLUTION: RAISE RATES AND CREDIT CARD FEES

Louisville Water Co. hasn't marketed low-flow fixtures, but 17% of customers use low-flow toilets, 79% use low-flow showerheads, and 12% use low-flow clothes washers.

Because such trends are beyond the utilitiy's control, Heitzman realized lost revenue had to be recouped through smarter business practices such as better operating efficiencies, new fees, annual rate increases, new customers, and new lines of business. (To learn how a wastewater operation in California offset declining revenues, see “Entrepreneurial expansion” on page 19 of our February 2010 issue.)

In 2009 he refinanced ongoing debt to reduce costs. The utility began charging credit card transaction fees of $2.50 for each bill payment, a move Heitzman encourages more utilities to make. When customers complained, call center representatives explained the utility was simply recovering the $1 million it was paying in credit card fees. That often halted the criticism.

The utility also continued to raise rates annually. It had been increasing rates by 3% to 4% each year since 1990, but since 2004 that's jumped to 5% to 6%. “Some communities skip raising rates for several years, and it becomes hard to make up,” Heitzman says. “They really get behind the rate curve.”

The utility also is expanding services to surrounding areas (called “regionalization”) and offering new lines of business.

In 2007, using the water bill as a marketing tool, it began selling a $5/month water service line protection plan that insures owners against damages to the service line on their property; 30% have signed up. A third-party contractor — Home Service USA — manages the program and assumes the financial risk. Local, licensed plumbers perform the repairs.

“We could either get into the business or have it be controlled by others,” Heitzman says. “When we offered this service, a small vocal minority felt we shouldn't. But we spent a lot of time educating them. After two years, we're getting positive feedback from customers who have saved thousands of dollars on repairs — and that's what counts.”

AVOIDING WATER ACQUISITION

Centennial (Colo.) Water and Sanitation District represents the water-poor communities of the South and Southwest. The water and sewer utility serves Highlands Ranch, a community south of Denver, relying on selective conservation programs and use-sensitive rate structures to maintain financial stability.

General Manager John Hendrick says the district has ample supplies to serve its 27,000 residential accounts, which comprise 87% of its 31,000 accounts. The utility's 432 miles of infrastructure can pump up to 40 mgd of surface water from the South Platte River, with deep bedrock aquifers providing backup supplies. A total of 5.5 billion gallons was delivered in 2009.

But out West, drought is always a possibility. In 2002 Colorado received 60% of its typical annual precipitation, forcing the prospect of mandatory restrictions. Acquiring new water on Colorado's Front Range is extremely expensive. Nor does the district subsidize operations using connection fees. To avoid tapping new sources and maintain revenues while encouraging conservation, managers looked for a way to reward prudent consumption.

In 2004, the district replaced its two-tier rate system with a water budget-based rate structure. Using aerial surveys and advanced databases created in-house, employees estimated how much water each residential account could reasonably use per year based on indoor requirements of 72,000 gallons and irrigation based on lot size.

Customers are charged a flat fee of $12.50/month, up from $4.95/month. The entire amount is set aside to pay for customer service and long-term debt.

Each residence is assigned a base indoor and outdoor allotment depending on the residence's size, and charged one of four tiers of increasing prices based on the amount of consumption beyond the allotment. For instance, a home on an average lot size of 75,000 square feet would get an indoor allotment of 9,000 gallons and an outdoor allotment of 27,000 gallons for the bimonthly billing cycle of July and August. The strategy joined a toolkit of efficiency measures that included conservation communications such as mailings and bill stuffers as well as rebates for water-efficient fixtures in addition to universal metering.

“We didn't do it just to be financially stable,” Hendrick says. “We also wanted to discourage waste among our individual constituents and nurture a culture of conservation.”

The year before the drought, the district sold 3.2 billion gallons of water to its residential customers. Since then, it has expanded the number of residential accounts by 21%. Yet the district has kept water use below 3.2 billion gallons each year. Individual household use dropped 21% between 2001 and 2009.

Bills have stayed flat, averaging around $50/month, and the district has a reserve fund of $30 million.

— Brand (rachel_brand@comcast.net) is a communications consultant for the Water Research Foundation.


National decline, regional variation

Residential water use trends from recently released Water Research Foundation research.

  • Per-household consumption fell an average of 0.44% annually or 13.2% over 30 years (1978 to 2008).
  • In 2008 a household used 11,673 gallons less water than it did in 1978.
  • The average Dallas household uses twice as much water as the average Seattle household, which has the lowest per-household consumption rate. Las Vegas — which has the highest per-household consumption — customers average 203,483 gallons per year.
  • Weather affects consumption rate. In Louisville, a 1° F increase in temperature caused average daily water use to increase by about .7 gallons.
  • Outdoor activities also affect water use. A swimming pool increases daily consumption by 65 gallons, a spa by 13, and lawn watering by 10.
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