How Does Government Reward Conservation? Higher Rates

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Call it the paradox of conservation. The local water board is raising rates because people in Charlottesville and Albemarle County, Virginia aren't using enough water. As the local weekly newspaper The Hook reports:

Declining useage means that local water bills are getting a double-digit increase, as the Rivanna Water & Sewer Authority's five-member board voted unanimously Monday, February 23 for wholesale water/sewer rates to climb nearly 11 percent in the city and 12 percent in the county— nearly double last year's increase.

"Rates must increase due mainly to lower flows," says the Authority's budget. "Although logic would seem to prescribe that lower flows would mean lower rates, the opposite is true when there are large fixed costs."

The region has experienced some droughts in recent years. Consequently, the public has been pummeled with public service messages telling them not to run the faucet while brushing their teeth and to use their dishwashers only when they are completely full. Apparently, the public listened and now this is their reward. 

Of course, the water authorities explain it a bit differently, arguing that their water restrictions resulted in lower use. Well, OK. Whether the citizens used less water voluntarily or because they were commanded to do so, hiking their water rates for using less seems more like a punishment for what the authorities were calling good behavior. 

And yes, this is the same county that plans to boost its property tax rate because housing values have fallen. 

Disclosure: I am a bemused resident of the People's Republic of Charlottesville. 

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  1. Of course, the water authorities explain it a bit differently, arguing that their water restrictions resulted in lower use.

    That’s worse. “Because we jacked you around, you get to pay more”

  2. WTF, Bailey?
    This shit happens all over the place, all the time.
    And it’s news because … it’s in your back yard?

  3. JK: Yes. But I also like to think that it illustrates a larger problem. 🙂

  4. I thought this said “the local waterboarding rates are rising”

    I thought maybe people were doing it for fun now…

  5. And I wonder if they have considered that higher rates may result in even less use… Durrr…

  6. my local water bill (from a company that has been sold 3 times in the past decade) has gone from about $52/qtr around 2005 to $89 most recently. ‘Water is a precious commodity and its price fluctuates’ they said in the last bill. Yeah ok maybe if I live where there is drought, I dont.

    Insult to injury – I pay the minimum usage bill. Which is about $10 more per qtr for me as my connecting pipe is 1/8″ *larger* than in some other homes. No, I dont use more water, I just pay more. But my pipe is bigger. So there.

  7. But I also like to think that it illustrates a larger problem.

    Government doesn’t have to be accountable or efficient when it holds a monopoly over resources and power?
    Methinks me gots it.

  8. Same thing has happened here in Atlanta. For the second time in two years… I stopped conserving water after the first increase, and after the second one many more people declared they’d do the same.

  9. Bailey, is the water bill itemized with a fee for base rate (fixed cost) and usage (flexible cost)?

    If it is, are they just raising the base rate to cover their large fixed costs? Your article doesn’t sound like that’s what they are doing, but if it is, then they are doing what is right. If instead they are raising the per gallon usage rate, then tell them I said to fuck off.

  10. Yes, they have. People who run water utilities are not idiots.

  11. “JK: Yes. But I also like to think that it illustrates a larger problem. :-)”

    That the only thing journalists really care about is themselves?

  12. The irony, of course, is that if they’d just raised rates in the first place they could have saved a bundle not running those public service ads; people would have conserved on their own.

  13. Sometimes i miss Charlottesville, but this is not one of those times.

  14. Nick – if the flat fee is for fixed costs, why would the fee need to rise? the only reason it would is if there was population loss, maybe.

    This sounds like they’re using the word “fixed costs” wrong, or maybe Charlottesville doessn’t have a base rate.

  15. It’s “fixed” in the sense of “The fight is fixed.”

  16. libertydyke: You’ve hurt my feelings. I do care about you and everyone else too. I really do.

    Nick: As far as I can tell, they are raising the usage rate. The Hook article reports: “The Authority plans to charge an average water/sewer wholesale rate of $2.63 per 1,000 gallons in the city (a 10.5 percent increase) and $3.20 per 1,000 gallons in the county (a 12 percent increase). If you’re having a slow afternoon, for further info on C’ville water rates go here.

  17. Moose, maybe I’m using “fixed” incorrectly. I mean if they have a certain operational cost regardless of the number of gallons flowing from source to faucet, say it costs a million dollars whether they send one gallon or one million gallons. That should calculate the base rate per customer. Then flow should determine the usage cost. It sounds like this dumbass town is only charging a fee per gallon OR Bailey didn’t read his bill.

  18. It’s “fixed” in the sense of “The fight is fixed.”

    “It’s gettin’ so a businessman can’t expect no return from a fixed fight. Now, if you can’t trust a fix, what can you trust? For a good return, you gotta go bettin’ on chance – and then you’re back with anarchy, right back in the jungle.”

  19. Call it the paradox of conservation.

    I would call it An Economic Calculation Problem.

  20. Is the fixed cost for capital upkeep?

  21. “And yes, this is the same county that plans to boost its property tax rate because housing values have fallen.”

    Actually, shouldn’t property tax rates rise with falling real estate values? Conversely, shouldn’t they fall with rising real estate values?

    Of course, they never do seem to fall. If property values double, then there obviously must be twice as much “needed services” for the town/city/county to provide.

  22. zeh is right, and now I just found another thing to be angry about. Ignorance really is bliss.

  23. Actually, considering that at the present rate the demand elasticity for tap water is likely less than the supply elasticity, raising rates will likely increase revenues even if it results in a reduction in consumption. In such an environment consumption would not decrease enough to offset the increase receipts per unit.

    But it’s probably a regulated public utility, so prices don’t reflect free-market behavior.

    DEMAND KURV!

    Have a nice day.

  24. Every utility has an overall revenue requirement. Regardless of whether it is designed as a base facility charge or gallonage charge, the end result is that the utility must recover a certain amount to break even.

    It looks like Charlotte has this situation: BFCs rose and gallonage charges were put on an inclining block structure. As a result, people used less water. The utility brings in less money and has to raise rates. If water gets scarce, the utility will raise rates to cover the cost of new wells and plant. Water is expensive and it will only get more so.

  25. mike,
    “Insult to injury – I pay the minimum usage bill. Which is about $10 more per qtr for me as my connecting pipe is 1/8″ *larger* than in some other homes. No, I dont use more water, I just pay more. But my pipe is bigger. So there.”

    When you end up having to pay the whores in government just to have them fuck you, they’re bound to ding you more for having a “bigger pipe”.

  26. NYS thruway authority recently raised tolls on the toll-road because it people were traveling less…I guess the fact that they should need less moeny for maintenance, toll-workers etc doesn’t come into play

  27. I would call it An Economic Calculation Problem.

    It’s only an economic calculation problem because the government is not trying to balance frugality with income, as would happen in the private sector.

  28. I’m with Jamie Kelly on this one. This exact same thing happened in Seattle a few years ago. The yabbos at the water department screamed “drought! Start conserving or we’ll have to raise rates”. At the end of the summer the same water department announced that Seattleites had conserved “so much” that sadly, rates would have to be raised.

    I’m guessing that had we not conserved that sadly, rates would have to go up.

    Let me just put this out there in case someone hasn’t got the standard government memo:

    Sadly, rates will be going up

    There. Now no one need be surprised or wonder what’s going to happen.

  29. Paul (6:45) yeah, and didn’t the Governor actually declare some kind of water emergency for the state? I seem to remember hearing it on the radio in the store where I was buying new windshield wipers.

    And I really would like them to lose the whole “sadly” attitude. I’d like to see those type announcements using words like “seriously” or “gleefully” or “because we can” – though best of all I’d like to see and hear the words “truthfully” and “inevitably” used more often.

  30. This is why, in the great state of Georgia, I use as much water as I can, to make sure everyone’s rates don’t get raised.

    I’m taking one for the team. So everyone in Georgia say thankya.

  31. “And yes, this is the same county that plans to boost its property tax rate because housing values have fallen.

    Disclosure: I am a bemused resident of the People’s Republic of Charlottesville.”

    Does it hurt when you sit down? Are you experiencing rectal bleeding?

  32. Don’t you libertardians realize that this is because they must do penance for their overconsumption in the past? GAWWW!

  33. “NYS thruway authority recently raised tolls on the toll-road because it people were traveling less…”

    The Orlando/Orange Co Expressway Authority is doing the same thing, for the same reason. As a kicker they are also putting in a provision for automatic “cost of living” increases.

    There a solution for GM, Ford & Chrysler, if fewer people are buying new cars, then they need to raise prices! How could their execs miss such an obvious solution?

  34. Lower usage does not necessarily mean lower rates, and that’s something people are going to have to get use to.

    The problem is the PR effort. I remember when the first oil crisis hit in the early 1970’s and the municipal electric authority launched a brilliant, highly successful, campaign asking people to slash their electric usage.

    The spokeman kept talking about how much the public company would have to pay if we didn’t reduce demand — clearly implying that if we, the users, did reduce demand, we could slide by.

    Not once was the possibility that the authority might have to charge a surcharge to make up for lost revenues mentioned.

    But then one day I went to pay my electric bill, puzzled by the 15% surcharge — and walked into a mini-riot. People were *not* being either patient, understanding, or polite; they wanted to know why in hell their bills this month were substantially more than last month’s, even though they had demonstrably reduced the amount of electricity used?

    Repackaged, the program could have been sold along with the aftermath. “Reduce usage now, pay more now, and we’ll move into new technologies that will *genuinely* reduce your bills.” That would have been especially appropriate in this case, as the authority soon thereafter installed a slew of wind turbines — and rightly received acclaim when folks’ electric bills really did go down.

    Final observation: wonder what it takes to get readers to understand this story is not a venue to attack this, that, or the other political party; save it for when you become active in the political life of your community, something over half the populace can’t be bothered with, since they’re so busy blabbing away on sites like this.

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