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Charge more for more water use?

RON SEELY
608-252-6131
August 7, 2007

But there's little financial incentive for Madison businesses and residents to use less water, according to an increasing number of critics who are pushing the Madison Water Utility to restructure its rates to encourage conservation.

The utility currently charges those who use large volumes of water — mostly industries and other commercial users — less when they use more water. The utility charges a rate of 97 cents per 748 gallons for the first 374,000 gallons used by any customer in a six-month period. But after that, the rate drops to 74 cents per 748 gallons. And nearly all the commercial customers of the utility use enough water to qualify for those lower rates. Oscar Mayer, for example, used 583.6 million gallons of water last year and, so, paid the lower rate for the largest part of its use.

The issue is even more pressing now because of what hydrogeologists say is happening to the aquifer from which Madison and Dane County draw drinking water. They say that this region is one of a handful in the state where growth has led to the long-term drawdown of the drinking water supply. Essentially, we are using our water faster than it's being replenished.

So pressing is the issue — especially during dry times when lawns turn brown and tree leaves curl — that an increasingly vocal group in Madison is pushing for tougher water conservation measures, including a restructuring of the Madison Water Utility's rates so that excessive water use is discouraged.

Conservation rates

The current billing approach, which gives big users a break when they use more water, is called a "declining block'' rate structure, a billing approach used by a majority of utilities in Wisconsin and elsewhere. Residents pay what amounts to a flat rate since they don't use enough water to qualify for the lower rate, so there is little financial incentive for homeowners to conserve water.

Mike Barrett, a Madison resident and a member of the city's Urban Design Commission, said these times demand conservation rates that will encourage less water use among both homeowners and businesses. He was one of several who spoke in favor of such rates during a recent meeting on water conservation sponsored by East Side neighborhood associations, the third in a series of meetings on city water issues.

Changing to conservation rates may indeed be in Madison's future. George Meyer, a member of the Madison Water Commission, said the commission has directed the utility to make conservation a priority and to study the possibility of changing the way it charges for water so that conservation is rewarded.

"There is now no incentive to conserve water from a financial standpoint,'' Meyer said of the current rate system.

A recent report on water conservation in Wisconsin, released by Midwest Environmental Advocates, an environmental law firm, pointed out that most water utilities in the state are more likely to encourage water use because the more water they sell, the more money is available to cover fixed costs. Reduced use, in other words, translates into less revenue.

If Madison adopts a conservation rate structure, it would be the second city in the state to do it.

Waukesha, faced with a water supply polluted by radium and a dramatically declining aquifer, adopted a new rate structure under which a more expensive conservation rate would kick in after the use of 30,000 gallons of water per quarter per household. It applies only to owners of one- and two-family homes. The higher rate is expected to be charged to about 1,900 households in summer and about 1,000 in winter. Those customers would see an increase of 26 cents per 1,000 gallons, or 15 percent. The new rate structure in Waukesha does not apply to business and commercial customers.

Saving water

In Madison, residents pay $1.30 for every 1,000 gallons of water used, much less than many other state residents. Overall use in the city in 2006 was 122.55 gallons per person per day. That number was less for residential users, 68.6 gallons per person per day.

But the utility has some large customers whose use dwarfs that of homeowners.

Madison's city government used 234.2 million gallons last year. And the city's hospitals are also big users, with St. Mary's using 51.1 million gallons in 2006 and Meriter using 44.1 million gallons.

Although the utility has more residential customers than business and commercial customers, the latter use the most water, about 5.3 billion gallons of the 8.8 billions gallons sold by the utility last year. Ken Key, customer service manager, said that of the utility's 57 large industrial customers, such as factories, 34 get the lower rate because of the large volume of water they use. Of 8,634 commercial customers, such as stores and other businesses, 562 get the lower rate.

Rarely do residential users get the lower rate, Key said, because homeowners don't use enough water to qualify.

Key said many business and commercial customers have water conservation programs in place. Kevin Bacon, plant manager at Oscar Mayer in Madison, one of the utility's largest industrial customers, said the company has cut its water use in the last year by improving the way the water used in manufacturing processes is condensed. He also said an energy conservation steering team meets monthly to discuss water conservation measures.

"We are always looking for ways to conserve water,'' Bacon said.

Scott Manley, director of environmental policy for Wisconsin Manufacturers and Commerce, said most industries would probably question the need for conservation rates because it already makes good business sense to find ways to conserve water, especially in manufacturing.

"They're doing conservation already because there are financial concerns driving it,'' Manley said. "When you're paying for water in large quantities, and you can find creative ways to conserve, you do.''

Suggestions considered

David Denig-Chakroff, general manager of the Madison Water Utility, said the utility is studying whether a change in the rate structure might be feasible.

"I think we need to look at all different approaches,'' Denig-Chakroff said. "But rates is one of them.''

Denig-Chakroff added that the utility has initiated a number of other conservation measures. He said, for example, that the utility conducts audits of customers that use large amounts of water and recommends ways that use can be decreased. That program saved 30 million gallons last year, he added.

Residents at the recent water conservation meeting had a number of other conservation suggestions. Madison resident Cassandra Garcia suggested billing for water monthly instead of every six months. That way, she said, use could be adjusted quickly if it has gone up.

"The first thing I do if I see that my electric bill has gone up is to go around and start turning things off,'' Garcia said.

But Robin Piper, accounting and financial manager for the utility, said going to a monthly billing schedule would be costly. And Key said surveys conducted by the utility show most customers prefer getting their bill every six months.

Piper and Key said, however, that the utility is considering a number of other suggestions from last week's conservation meeting, including finding a way to use the water that is being used for flushing mains of the mineral manganese. Perhaps, residents suggested at the meeting, the water could be used to fill fire trucks or wash the city's vehicle fleet.