Pricing Practices in the Electricity Sector to Promote Conservation and Efficiency: Lessons for the Water Sector

Pacific Institute | September 11th, 2013

Because water utilities are dependent on the sale of water to recoup costs, reduced sales can result in deficits – and per capita water demand in California has been st

Because water utilities are dependent on the sale of water to recoup costs, reduced sales can result in deficits – and per capita water demand in California has been stagnant or decreasing for the past several decades. Over the coming years, California municipal water utilities are required to reduce water use by 20%. Thus, the “new normal” or an era of declining demand and rising costs is a trend that is likely to continue. Water utilities can learn from a number of electricity pricing practices to help adapt to this “new normal” while staying fiscally solvent and providing fair prices. “California’s energy sector has implemented many pricing policies that seek to balance a commitment to energy conservation with utility financial health,” said Kristina Donnelly of the Pacific Institute, lead author of the report. “Both water and energy utilities are coping with similar financial challenges related to demand reductions and stand to benefit from a greater exchange of information and lessons learned.” In order to understand how some of these practices might be relevant to the water sector, the Pacific Institute examined a range of electricity pricing practices and policies that California electric utilities use to remain financially stable even when per capita demand is decreasing. The paper, Pricing Practices in the Electricity Sector to Promote Conservation and Efficiency: Lessons for the Water Sector, helps inform discussion at the local, regional, and state level about water pricing in light of recent and future reductions in water demand.

Socio-hydrological drought impacts on urban water affordability

Nature Portfolio (Springer Nature) | January 19th, 2023

In water-stressed regions, droughts pose a critical challenge to urban water security for low-income households. Droughts reduce water availability, forcing water provide

In water-stressed regions, droughts pose a critical challenge to urban water security for low-income households. Droughts reduce water availability, forcing water providers to invest in additional supplies or enact expensive, short-term emergency measures. These costs are frequently passed on to households through increased rates and surcharges, driving up water bills for low-income households and altering patterns of water consumption. Here we have developed a socio-hydrological modelling approach that integrates hydrology, water infrastructure, utility decision-making and household behaviour to understand the impacts of droughts on household water affordability. We present here an application based on Santa Cruz, California and show that many drought resilience strategies raise water bills for low-income households and lower them for high-income households. We also found that low-income households are most vulnerable to both changing drought characteristics and infrastructure lock-in.

The unequal burdens of water scarcity

Nature Portfolio (Springer Nature) | January 19th, 2023

Curtailing water use during drought is costly, but those costs are not evenly distributed. Socio–hydrological modelling shows how water burdens fall more heavily on poo

Curtailing water use during drought is costly, but those costs are not evenly distributed. Socio–hydrological modelling shows how water burdens fall more heavily on poor households in response to water conservation policies.