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SUBJECTS › ENVIRONMENT › Water Rates That Encourage Conservation

Updated 02/08

Water Rates That Encourage Conservation

Water rate policies can be used to encourage water conservation. However, pricing must be set to provide adequate revenues to operate the utility in a fiscally sound manner. Rate structures vary and some jurisdictions have a combination of rate structures. The flat rate based on class structure generally reflects the average commodity costs. The declining block rate, which reduce the rate as more water is consumed, may encourage water usage and discourage conservation. The inverted block rate which charges more as the consumption increases encourages conservation, but may not provide revenue stability for the utility if not combined with other rates. Some jurisdictions have a summer rate or seasonal structures which charge more when water is less plentiful. Others have drought provisions which go into effect when there is a water shortage. It is also common to correlate sewer charges to water use. The higher the water consumption the greater the sewer charge.