3 Dec 2008

Conservation Pricing and AB2882

Six months ago I blogged [here and here] on California's AB2882, which was "chaptered" (became law) [PDF] at the end of September.

The good news is that AB2882 makes it easier for water managers to raise their water service rates "to increase water efficiency" [It's interesting to look at the history of the Bill, i.e., you an see where they changed the wording from "reduce inefficient waste" to "increase water efficiency."]

The bad news is that the original text (the higher price tier should be no less than triple the rate of the lower price tier) has been replaced by vague wording, i.e.,
A conservation charge shall be imposed on all increments of water use in excess of the basic use allocation. The increments may be fixed or may be determined on a percentage or any other basis, without limitation on the number of increments, or any requirement that the increments or conservation charges be sized, or ascend uniformly, or in a specified relationship. The volumetric prices for the lowest through the highest priced increments shall be established in an ascending relationship that is economically structured to encourage conservation and reduce the inefficient use of water, consistent with Section 2 of Article X of the California Constitution.
Well, that means just about anything you could imagine.

Besides this weakness in tier levels, AB2882 also caps prices increases, i.e., "Revenues derived from allocation-based conservation water pricing shall not exceed the proportional cost of service attributable to the customer's parcel, as determined by giving consideration to all of the following..."

The approved wording was, according to Alf Brandt, limited by Proposition 218, which requires that prices be proportional to charges.

As many of you know, I advocate prices that are high enough to get people's attention, even if the resulting revenue exceeds the cost of delivery (excesses would be rebated per capita). Such rebates would enhance equity, but they would also be disproportional, i.e., water wasters would subsidize water misers. (I wonder if some clever water manager will suggest that "charges" include the scarcity value of water as a means of raising prices.)

Bottom Line: AB2882 is a good start, and increasing tiered prices are the first good step towards better water management. Too bad only 45 percent of California's urban water providers use increasing block rates! (The rest use flat or decreasing block rates, which basically screams "hose down your driveway!")

No comments:

Post a Comment

Note: only a member of this blog may post a comment.