19 January 2009

Stupid Water Bills

A few months back, I blasted East Bay Municipal Utility District (EBMUD) for their badly-designed water conservation scheme. Last week, I got my water bill for the past two months, and now I see that I was too kind.

EBMUD is really NOT doing a good job at handing the water shortage.

Here are some facts:
  • Our water and sewer bill is $125. Of this, $36 is variable (metered water use), and $89 is fixed.
  • Of the $36, we paid $26 for 13 units (748 gal/each), and $10 for "excess" use of 5 units.
  • That 100 percent surcharge works out to $5/month, i.e., one more latte/month.
First, I don't care about $5/month surcharges. EBMUD's "penalty" pricing is not incentivizing me, and I will continue to use as much water as I want.

Second, we used 145 gal/day, which is above our "allocation" of 89 gal/day. We are two guys who don't water the lawn. We wash clothes and dishes in the machine (about 3 loads/week) and take occasional showers -- I shower at the gym; Nick stays with his GF a lot. So where should our water "savings" come from?

Third, our allocation for the next two months is 99 gallons/day because EBMUD is giving us the same number of units (8), but the billing period is 60 instead of 67 days. (BTW, I checked the meter -- it has 1.00 unit accuracy!)

Why are accounting details driving water use quotas?!? It seems that EBMUD is more interested in a billing cycle than a sensible communication on water use.

Further, EBMUD has NO IDEA of how many people are in this house (a per capita allocation) and NO IDEA of our water habits. EBMUD just looked at historic use at this meter and knocked 20 percent off that use.

I am NOT a meter! I am a human, and humans need to have water budgets and charges posed to them in HUMAN terms.

Here's how (doh!)
  1. Count the number of people at the meter.
  2. Each person gets x gallons/day (say 50) at a cheap rate.
  3. Use above that rate pays a 100-200 percent surcharge.
Bottom Line: Water utilities can fail at execution because they are monopolies, and the penalty for failure is just rationing.

10 comments:

  1. A few thoughts...

    Is it oversimplifying to make your pricing structure: price = f(number of people using meter, amount of water used at meter).

    So the most obvious thing that comes to mind is building efficiency issues. In my mind, these can take two forms: building _type_ efficiency, and building _instance_ efficiency. We want the (price of water/units of water) ratio to be higher for an inefficient house than an efficient house (which is, more or less, already built into your pricing model)... but it's not so clear that we want the same price effect for building type. i.e. penalty for having a house instead of an apartment.

    I guess the difference is whether we want to incentivize a certain housing type, or to incentivize better efficiency within housing types.

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  2. Mr. Zetland,

    Just heard your Bloomberg interview on a podcast and thoroughly enjoyed listening. I work in finance, unrelated to utilities or consumer goods of any kind, but will be following your blog in the future.

    I believe the availability of clean water will definitely be a big economic issue going forward and it will be interesting to see if our leaders can make smart choices (my money is on no, unfortunately). Looking forward to reading through your blog and learning a thing or two.

    Thanks for posting your stories and opinions.

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  3. The problem David, as you noted, is that EBMUD and most utilities don't know how many people there are per household. We know total population-roughly, and we know total number of accounts, but we don't know exact persons per account. If we wanted to pick an average number of persons per account, would that work and what should that number be?

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  4. David,
    This is the flaw in Aquanomics. There is no way that water utilities can track the number of people in a home. It goes beyond simple water billing, it transends into privacy. Are we now requiring families to contact utilities to report a newborn in the family? Are we now requiring a household to report additional roomates?

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  5. @ Blake -- I don't care about houses or apartments, lawns or xeriscape. If people want to use more water than the minimum, they pay more.

    @ Benjamin (and westcheserparents) -- Places that *do* assume number of people (e.g., EBMUD does) often assume 6 or more. Houses that have more than 6 can qualify for discounts.

    As to the privacy issue, I don't think that's really relevant. One way to do "voluntary" disclosure is to assume that every household is 2 people and then allow people to file for upward adjustments.

    The other, more obvious, way is to just ask for SSN -- like the IRS does -- for inhabitants. It's not a very meaningful cross-check, but it's been successful at reducing fake deductions on tax returns...

    Compared to shortage, the transaction costs of per capita rates are small -- and the equity value is large.

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  6. Monitoring water use per meter is as good as a water utility can do. Any "per capita" measurements would be estimates.

    We all can reduce our "per household use" with simple retrofits like low flow sink aerators, shower heads, and tank displacement bags in our older toilets. Leak detection is another really good step--you'd be surprised at how many little leaks and drips add up. Leak disclosure tablets in your toilet tank will show if your toilet has a "silent" leak and needs a new flapper. To detect bigger or hidden leaks (which can cause terrible damage if they get away from you), read your meter as you leave for a trip or vacation where your house is empty for a stretch of time. Read it again when you get home. If any units are used, you have a leak somewhere.

    Of course raising prices would encourage folks to take even more aggressive efficiency and conservation measures! People really thought hard before driving when gas was over $4 a gallon.

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  7. Has anyone thought about water harvesting to save money on water bills?

    I am starting a rainwater harvest system at my home. It will save me lot of money during the drought.

    If you are trying to figure out how to use your gray water, you can pump it through sand filter which removes dirt, hair, lint and other particles. The filtered water continues to the drip irrigation tubing where it is dispersed into the soil.

    Wear I live, we are in the worst Drought ever. We are facing water rationing and higher produce cost.
    More than 80 percent of the area’s annual rainfalls between November and March, but during the months of May and October, we get very little rainfall. One inch of rainwater produces 623 gallons of rainwater per 1,000 square feet of projected roof area. Around here, we get 21 inches of rain a year which would yield almost 13,500 gallon of water. If you want to estimate the amount that is produced in your area check the Texas Manual on Rainwater Harvesting.

    You can expect to pay between $100 and up. It can be as simple as a rain-barrel or as complex as an underground tank connected to a water fall in your garden.

    I am getting ready to start a project at my home which uses rainwater for toilet and laundry water. Two 3000 gallon tanks installed under my garden will store enough water to supply toilet and laundry water through the rainy season (November to May). After the tanks run dry, I will be able to flip a switch to turn the city water on for the remaining months of the year

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  8. "Water utilities can fail at execution because they are monopolies, and the penalty for failure is just rationing."

    You are right. EBMUD has the worst managers. They are always wasting money.
    How do I know? I use to work there. How do we get transparency to see how they are spending tax payer’s money? When I was an employee, we were told that the only way EBMUD can make money was through a drought. That was in 2007. Now we have a drought and they have a surplus of $6,000,000.00 dollars.

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  9. Management mis-manages and wastes money

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  10. I agree with Blake. How would a utility get information about the number of people in a household? Too difficult. However, I like the idea of assuming 2 person households and then people can start providing SSNs or some other verification of how many people actually live there, though that won't work for immigrant families very well. Agree that the units are anachronistic.

    By the way, I hate to say it, but you and your roomie are water hogs. And EBMUD should charge a lot more for the water that you must be wasting. My husband and I use about 80 gals/day between the two of us and we shower at home every day (well, most days). We don't flush every time (yellow, let it mellow), and we have water efficient appliances, an aerator on our faucets and a freebie showerhead from EBMUD. We do have a lovely yard with native plants and veggies. We save the warm-up water from our showers and sinks and use it to water plants, and also put in a drip irrigation system. And we could probably do even better with dish washing and rain water catchment.

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