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City of Conroe Revenue Stability Through Rate Design
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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

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

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  • 1. Revenue Stability Through Rate Design June 13, 2014 Chris Loomis Environmental & Water Conservation Manager 1
  • 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. 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. 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. Average Per Capita Demands 5
  • 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. Conroe’s Current Water Meter Rates 7
  • 8. Conroe’s Current Water Rates 8
  • 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. Tracking the Static Water Levels of the Jasper Aquifer 10
  • 11. Tracking the Static Water Levels of the Jasper Aquifer 11
  • 12. Questions? 12