Most Water Utilities Missing Opportunity to Stretch Water Supplies

BOSTON, Mass., Aug. 11, 2015 /3BL Media/ -  As many U.S. communities are struggling to support growing populations with limited water resources, very few of them are utilizing water connection charges to increase water-savvy residential development projects in their communities. So concludes a new report by Western Resource Advocates, Ceres, and the University of North Carolina's Environmental Finance Center evaluating water connection charges used by 800 public water utilities in Arizona, Colorado, Georgia, North Carolina and Utah.

The first-of-its-kind report entitled “Water Connection Charges: A Tool for Encouraging Water-Efficient Growth” found that 93% of the fee structures in the Southeastern states and 62% of the fee structures in the Western states used uniform water connection charges for single-family homes that took no account of key factors in influencing the design of a home's water footprint. As a result, owners of new homes are typically paying the same amount to be connected to local water systems despite wide-ranging differences in their water use. For the Executive Summary or Full Report visit http://www.westernresourceadvocates.org/water/waterconnectioncharges or http://www.ceres.org/resources/reports/water-connection-charges-a-tool-for-encouraging-water-efficient-growth/view.

“Whether your new home uses a lot of water or is designed to minimize its water footprint – most utilities charge the same amount to connect the homes to the water system,” said Amelia Nuding, Senior Water Analyst at Western Resource Advocates and lead author of the report. “Connection charges are a powerful tool that many utilities can use to stretch limited water supplies, but most are missing this in their toolbox.”

The report found that 10% of the 800 local water utilities, most of them in water-parched Colorado, are including water-saving incentives in water connection charges, and initial results show how effective these are at shaping different developments. In the case of Aurora, CO, the state's third-largest municipality, five of six new developments coming on-line since 2014 used “zero-water” landscaping in order to get a 100% refund on their connection charges.

“We were surprised at how few communities use anything other than meter size to allocate costs among new customers,” said Jeff Hughes, Director at the University of North Carolina Environmental Finance Center and co-author of the report.

"Well-designed connection charges that incentivize water-efficient development show enormous potential to help utilities reduce overall water demand and avoid costly new infrastructure projects," said Sharlene Leurig, director of Ceres' sustainable water infrastructure program and a co-author of the report.  "Unfortunately, very few of the 800-plus communities we evaluated are taking advantage of this valuable tool for encouraging water-efficient growth."

Numerous studies have been done on how U.S. water utilities should price the volume of water being sold to customers monthly in order to incentivize efficiency. Far less research has been focused on how to determine water connection charges – typically the cost of the actual physical connection to a water system, plus costs for developing new capacity to serve the customer – in order to influence development behavior.

The report analyzes water connection charges in five fast-growing states which are all experiencing varying degrees of water scarcity and resource vulnerability, thus making them more likely to have connection charges designed to influence future water demand. Researchers evaluated 450 rate structures in North Caroline, 290 in Georgia and 60 from three Western states (20 each in Arizona, Colorado and Utah.) The report looked at which factors were used by utilities in determining their water connection charges, such as lot size/irrigated area; types of landscaping (such as low-water-use plants vs. turf grass); efficiency of water fixtures; and house size/ number of bedrooms/bathrooms. The report includes four case studies showcasing the effectiveness of multi-factor water connection charges in changing behavior.

The report recommends utilities consider using multiple factors to determine the connection charges to drive water efficiency and capture the costs of new development. The report also recommends mechanisms to ensure longevity of water savings and suggests utilities fully engage customers and developers in designing new connection charges.

About Western Resource Advocates
For over 25 years Western Resource Advocates has been one of the West’s leading conservation groups protecting the region’s air, land and water. We use the law, science and economics to craft innovative solutions to the most pressing conservation issues in the region. Visit www.westernresourceadvocates.org or follow on Twitter @wradv.

About The University of North Carolina Environmental Finance Center
The University of North Carolina Environmental Finance Center is a public service and applied research unit of the University of North Carolina that works to help governmental agencies and other organizations provide environmental services in fair, effective and financially sustainable ways. Visit www.efc.sog.unc.edu

About Ceres
Ceres is a nonprofit organization mobilizing business and investor leadership on climate change, water scarcity and other sustainability challenges. Ceres directs the Investor Network on Climate Risk (INCR), a network of institutional investors with collective assets totaling more than $13 trillion. Ceres also directs Business for Innovative Climate & Energy Policy (BICEP), an advocacy coalition of dozens of companies committed to working with policymakers to pass meaningful energy and climate legislation. For more information, visit www.ceres.org or follow on Twitter @CeresNews and @ValueEveryDrop.