29 Jul 2008

How NOT to Raise Prices 2

[Prior post] This op/ed blasts an ineffective and inequitable change in pricing at East Bay Municipal Utilities District (next to San Francisco) that allows water wasters to pay less than water misers. How? By grandfathering wasteful habits, i.e.,
The district has added another layer of fees — a surcharge on the water used above each customer's "water use allocation." That allocation is computed by averaging each household's average water use for the same billing period in the past three years. For single-family households, water use above 90 percent of that allocation will face a surcharge of $2 per unit.

Here's where the plan starts to fall apart: The surcharges punish households that have conserved in the past and allows past water-wasters to continue their bad consumption habits without penalty as long as they don't use more water than in the past. Many people cut their consumption after the last drought in the early 1990s. They put in drought-resistant landscaping and low-flow shower heads. They should be rewarded, not punished, for their behavior. The district should drop the surcharge and simply raise rates for heavy users.


The question is not whether the rate structure should be fixed; it's whether the water district directors have the political courage to stand up to the water-wasters. Only 6 percent of the district's single-family households consume more than 1,230 gallons per day (50 units per month). Most of them are probably living in big homes with massive lawns. They can afford to pay more — to pay their fair share. Maybe some of them would start conserving if they faced higher bills.
I've attacked this mistaken "price reform" before, but it seems that EBMUD is determined to carry on with their mistake.

Bottom Line: Water prices should treat every PERSON equally. Someone who lives on a large lot (or uses a lot of water) should face the same prices as someone who lives in a tiny apartment (or uses very little water). Not only is it fair (people are people), but it's efficient (wasters who face higher prices will use less).

hattip to DW


Anonymous said...

This kind of BS reflects the fact that most water agencies, if they are not departments of a given city, have boards made up of
political appointees who typically represent private real estate developers and commercial businesses. As such, they tend to pile any new rate increases on residential customers while sheltering business, governmental and ag customers from higher rates.

As you know, regional water agencies grew up separate from local governments. Typically an existing local dept wouldn't agree to provide water to developers who wanted to build new subdivisions out he rural fringe of established citiesor counties so the developers funded political campaigns to set up new, separate water agencies to serve the outlying areas, and stacked the new agencies boards and managements with their shills. That hasn't changed, even after much of the state has been built out.

Anonymous said...

What would it take for EBMUD to actually know how many people lived at billing address?

I am considering, say, an extended family that washes the babies' diapers and Grandma's sheets. Cue violins. But to be fair person-by-person, we'd have to take that into account.

David Zetland said...

@anon2 -- person = person.

EBMUD would need a count of residents at each address. One way to do that is require SSN lists from each dept. Although this may seem invasive (or risky wrt identity theft), the IRS requires that now.

Another option is to "assume" one (or two) residents/meter and then let people file for more allotments by providing SSNs.

(This could be a big issue if different water districts used SSNs and did *not* reconcile these databases.)

Oh well -- you do what you can...

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