Water utilities in the US are using conservation-oriented water rate structures
to help promote the efficient use of water. Seasonal rates, inverted-block
rates and excess-use rates provide pricing signals that promote water conservation,
particularly for residential customers. However, the effectiveness of these rate
structures in reducing water usage levels is sometimes questioned by utility regulators,
city officials, and even utility customers. In this paper, three case examples of
water systems that are using these conservation promoting rates are examined to assess
how effective these rate structures are both in conveying appropriate pricing
signals to customers and in helping to support broader conservation efforts. The
paper concludes with suggestions for water utilities considering implementation of
conservation-oriented rate structures. Includes 3 references, tables.