Water Conservation Efforts Require Decoupling of Rates From Sales Volumes

Editor,

Congratulations on your launch of The Blue Paper and thank you for Michael Welber’s article about the water supply implications of the state’s failure to restrain development in the Keys. I’d like to elaborate on one of the fundamental obstacles to reducing demand for utility water and a solution.

American’s consumption of water is by far the highest in the world. Estimates vary, but the average American consumes 100 gallons of water per day (GPD), while it’s 35 GPD for southeast Queensland, Australia, and the U.S. rate structure perpetuates our profligacy.

Both water and electric utilities with traditional rate structures are deeply conflicted when they advocate conservation and efficiency. They don’t want the programs to be wildly successful, because they derive their revenue from selling the resource. The greater the consumption, the greater their income and vice versa, as Mr. Welber stated.

The National Association of Water Companies (nawc.org) states on their website, “Acting as responsible stewards of scarce water resources will increase financial pressure on water service providers as fixed costs must still be recovered despite decreasing per capital sales volumes. One potential solution to this challenge is the concept of ‘decoupling’ rates from sales volumes, which can help address both the need to more efficiently use water while keeping the utility financially sound.”  If we want utilities to sincerely promote conservation and efficiency, we must  reward them for doing so.

Heretofore, “decoupling” has only been done with electric utilities (the Florida Keys Electric Cooperative has recently shifted their rate policies in that direction), but the same economic principles apply to water utilities and should be given serious local consideration.

Had the Aqueduct Authority been financially motivated to dramatically reduce demand, perhaps the very expensive water- and energy-consuming RO plant could have been avoided, which would have saved capital costs and conserved water.