Revenue Stability
Through Rate Design
June 13, 2014
Chris Loomis Environmental & Water Conservation Manager
1
Addressing the Water
Conservation Conundrum
• Currently the City of Conroe has a high ratio
of variable water revenue to f...
City of Conroe Rate Design
Committee Goals
3
• Develop a rate structure that supports
water and sewer system expenses and ...
Rate Considerations
4
• The City of Conroe has a set fixed and
variable cost that need to be recovered.
• High water conse...
Average Per Capita Demands
5
The City of Conroe uses
Inclining Block Rates
6
Pro’s
• Sends a strong pricing signal.
• Discourages usage.
Con’s
• Discou...
Conroe’s Current Water Meter Rates
7
Conroe’s Current Water Rates
8
Water Rate Recommendations
9
• Future price increases will go to the base
rate to increase fixed revenue.
• Consider a sur...
Tracking the Static Water Levels of
the Jasper Aquifer
10
Tracking the Static Water Levels of
the Jasper Aquifer
11
Questions?
12
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City of Conroe Revenue Stability Through Rate Design

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Chris Loomis - Presented at TWCA Mid Year Conference - June 13, 2014

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City of Conroe Revenue Stability Through Rate Design

  1. 1. Revenue Stability Through Rate Design June 13, 2014 Chris Loomis Environmental & Water Conservation Manager 1
  2. 2. Addressing the Water Conservation Conundrum • Currently the City of Conroe has a high ratio of variable water revenue to fixed revenue. • The city has experienced in past years a drop in sales volume due to drought, wet weather and conservation. • Increasing the variable portion of the water rates would increase revenue vulnerability. 2
  3. 3. City of Conroe Rate Design Committee Goals 3 • Develop a rate structure that supports water and sewer system expenses and also meets current financial, political and social goals. • The new rate structure must take into consideration that water conservation may end up raising rates. • It’s important to have a higher ratio of fixed revenue.
  4. 4. Rate Considerations 4 • The City of Conroe has a set fixed and variable cost that need to be recovered. • High water conservation rates run the risk that higher users will use less water in a wet season. • Should high users subsidize low users. • Too high of water rates will elicit a behavioral response that will drop sales volume.
  5. 5. Average Per Capita Demands 5
  6. 6. The City of Conroe uses Inclining Block Rates 6 Pro’s • Sends a strong pricing signal. • Discourages usage. Con’s • Discourages usage. • Weather sensitive. • Can be politically unpopular.
  7. 7. Conroe’s Current Water Meter Rates 7
  8. 8. Conroe’s Current Water Rates 8
  9. 9. Water Rate Recommendations 9 • Future price increases will go to the base rate to increase fixed revenue. • Consider a surcharge for Stage 3 Drought Contingency. • Increase water meter rates to reflect the rate of similar cities. • Consider a 4 tier rate structure instead of the current 6 tier rate structure.
  10. 10. Tracking the Static Water Levels of the Jasper Aquifer 10
  11. 11. Tracking the Static Water Levels of the Jasper Aquifer 11
  12. 12. Questions? 12
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