Water pricing in Lantzville and Rutland Waterworks District
A 2004 Water Conservation Survey conducted by the Ministry of Water, Land and Air Protection and the BCWWA’s Water Sustainability Committee indicated that few utilities are using any formal economic or financial tools to promote water conservation. The most widely used tool—analysis and study of universal metering or a metering pilot—is employed by just one in three utilities surveyed, and is being considered by just over one in four. Other tools employed include cost/benefit analysis, assessment of pricing structures, and service charges. While assessing pricing structures is not currently widespread, nearly half of utilities surveyed do appear to be considering implementing this in the future.
The District of Lantzville and Rutland Waterworks District are two proactive utilities that have assessed and restructured their water pricing to reflect water’s true value and to guarantee the capital needed to maintain their systems effectively.
District of Lantzville:
The District of Lantzville’s community water system is supplied by a wellfield whose capacity was reached several years ago. “To encourage water conservation, a tiered pricing system was implemented,” explains Director of Finance Jane Ayers. “We reviewed water consumption patterns and determined that we needed to increase the number of tiers in residential water rates. For most of the year, 90 percent of the residents are within the lowest two tiers. We wanted to encourage the other ten percent of residents to practice more thoughtful water usage.
“Higher rates are charged for higher levels of consumption. Even with watering restrictions in the summer months, high consumption occurs at that time to the detriment of the aquifer. Higher rates at higher consumption levels encourage most people to be conscientious about their water usage.”
To determine what the cost of water should be, the district compared its rates to those of other communities in the area. “We wanted to aim the rate increases at the higher consumption levels to encourage conservation,” says Ayers. A Tiered water rate system had been in place in Lantzville as far back as 1976. The most recent residential increase was introduced in 2003; the most recent rise in rates for commercial users occurred in 2004.
Rutland Waterworks District:
As explained by manager Bruce Wilson, “Rutland Waterworks District is mainly metered, which gave staff the tool to apply rate increases fairly based on consumption. The soaring costs of power, labour, and materials meant that rates had to increase to keep pace with these demands. Also, the additional responsibilities placed on the district for protection and control of water quality and quantity required more funding.”
Determining an appropriate price was a complex task. “Factors such as customer base impacts, the local economy, neighbouring water pricing, and uncontrolled costs such as power, insurance, consultant services, and labour are just a few examples of the many different components of pricing,” says Wilson. “On top of this we have new legislation, regulations, and operating requirements set out by Interior Health.
“The rate structure of our district is governed primarily by consumption because we can measure the amounts used by the meters. The base rate, which is about $230 per year, is established using income and expense operation guidelines for an average year. You must recover your operating costs no matter what the weather might bring, and you must make sure that water is affordable to the customers for their basic needs. An allowance of 5,000 gallons per month is included in the base rate costs. Once the 5,000 gallons is used, then the rate increases in increments of consumption. As more water is consumed, the water becomes incrementally more expensive. This acts as a deterrent and captures funds needed to meet demands placed on the system.
Surprisingly, there were few complaints from Lantzville residents about the price increases. Jane Ayers explains that “Conservation is a concept that is well accepted here.”
Rutland Waterworks District customers have a high level of acceptance, however,some residents still take water for granted. “When you have huge lakes surrounding your community and rivers and streams running year round, the perception is that water should be free or very cheap. It has remained the least expensive commodity of necessity mainly due to lack of understanding of the costs and requirements to have water running from all taps 365 days a year and to maintain a standard that is safe to drink and reliable. Obviously, then, the first step is to help the public understand the issues. This has to be done with accuracy and commitment and really needs to come from our major governments.”
“In Lantzville, third quarter consumption for 2003 dropped nine percent from 2002. However, the earlier imposition of “Stage 2” watering restrictions during that dry summer also impacted consumption,” says Jane Ayers. Bruce Wilson says that consumption has decreased over the years. Most customers are becoming more aware of the need to use water wisely, and this is partially due to a concern for the environment and partially due to the expense of overuse.”
Jane Ayers advice to other communities considering rate restructuring is to give people lots of warning. “We gave our commercial users one year’s notice that rates would go up and advised them to introduce water-saving measures in their operations. Education as to the issues and the consequences on non-action also help to elicit cooperation.”
Bruce Wilson says, “Your customers deserve to be informed of the need for increases based on the many demands placed on the operating budgets. Keep your customers informed and they will work with you, but don’t abandon rate hikes and sacrifice the health and sustainability of your water supply.”