6 ms·

Pretty sure the issue with utilities is that basically the entire cost is the fixed part. The incremental cost of delivering a few thousand litres of water each

Pretty sure the issue with utilities is that basically the entire cost is the fixed part. The incremental cost of delivering a few thousand litres of water each day to any one house is effectively zero. Even worse, the fixed cost varies enormously depending on the particulars of any one residence (older infrastructure costs more to maintain, for example). So it's really hard to come up with a truly fair scheme for distributing these costs— pretty much no matter what you do, some households will be subsidizing other households. If not on their water bill, via their income taxes.

ip26 7y ago
You can very reasonably turn e.g. a damn or a water treatment plant into a usage charge. Say you want to pay it off in thirty years. Divide the cost by thirty & project the annual quantity of water it will provide. Set the rate to match. The true(st) fixed costs are things like the last mile to your house, that only you benefit from.
- smileysteve 7y ago
  If you had done that 30 years ago, you'd likely be a little short though, as consumer demand for water has in many cases shifted to bottle water. Though, i suppose showering habits have changed. Oh, but toilet flush and low flow stuff has happened to everything.
  - crazypyro 7y ago
    https://www.usgs.gov/special-topic/water-science-school/science/trends-water-use-united-states-1950-2015?qt-science_center_objects=0#qt-science_center_objects https://www.usgs.gov/special-topic/water-science-school/scie... Public supply usage hasn't changed meaningfully for a few decades.
    - armenarmen 7y ago
      That’s really surprising! Population more than doubled in that timeline and usage went up by way less, and per person water use is even more dramatically down in the past few decades
      - fingerlocks 7y ago
        I would guess that technology played a major role in lowering water consumption. Most of household water use comes from washing clothes, dishes, bathing, and of course watering the lawn and garden. Automatic clothes and dishwashers are far more common now, and today’s models are more efficient than than manually performing the same task by hand. Simple automated drip irrigation systems can be had from any local hardware store, customizable to deliver the exact amount of water needed to plants at the most optimal time to minimize wasted water from evaporation. And low pressure shower heads are everywhere now; the ridiculous hurricane bathroom shower of the 70s and 80s is only fond childhood memory.
  - ip26 7y ago
    Depending on the utility, rates are often adjusted on an annual basis, explicitly to track towards profit neutral or slightly above.
rayiner 7y ago
Water and sewage treatment is not what you'd generally call a "fixed cost" since it involves ongoing operational costs (labor, chemicals, etc.). On the other side, usage fees are split into a fixed-cost portion (the connection charge, which runs $30-70k) and a variable-cost portion (per-gallon charges).
- brewdad 7y ago
  You can tweak the balance between fixed and usage charges though. I've lived places where the fixed amount of my water bill was maybe $10-$15/mo while a unit (~750 gallons) of water was about $5. My current home, at the other extreme, has almost $90/mo in fixed charges while a unit of water runs about $1. Not nearly the same incentive to conserve water but I am much more confident that my city will still be able to service the infrastructure 20 years from now.
- colechristensen 7y ago
  The capital cost of treatment facilities is enormous and fixed. The operating cost of those treatment facilities changes very little per gallon comparatively.

ip26 7y ago

You can very reasonably turn e.g. a damn or a water treatment plant into a usage charge. Say you want to pay it off in thirty years. Divide the cost by thirty & project the annual quantity of water it will provide. Set the rate to match. The true(st) fixed costs are things like the last mile to your house, that only you benefit from.

smileysteve 7y ago
If you had done that 30 years ago, you'd likely be a little short though, as consumer demand for water has in many cases shifted to bottle water. Though, i suppose showering habits have changed. Oh, but toilet flush and low flow stuff has happened to everything.
- crazypyro 7y ago
  https://www.usgs.gov/special-topic/water-science-school/science/trends-water-use-united-states-1950-2015?qt-science_center_objects=0#qt-science_center_objects https://www.usgs.gov/special-topic/water-science-school/scie... Public supply usage hasn't changed meaningfully for a few decades.
  - armenarmen 7y ago
    That’s really surprising! Population more than doubled in that timeline and usage went up by way less, and per person water use is even more dramatically down in the past few decades
    - fingerlocks 7y ago
      I would guess that technology played a major role in lowering water consumption. Most of household water use comes from washing clothes, dishes, bathing, and of course watering the lawn and garden. Automatic clothes and dishwashers are far more common now, and today’s models are more efficient than than manually performing the same task by hand. Simple automated drip irrigation systems can be had from any local hardware store, customizable to deliver the exact amount of water needed to plants at the most optimal time to minimize wasted water from evaporation. And low pressure shower heads are everywhere now; the ridiculous hurricane bathroom shower of the 70s and 80s is only fond childhood memory.
- ip26 7y ago
  Depending on the utility, rates are often adjusted on an annual basis, explicitly to track towards profit neutral or slightly above.

rayiner 7y ago

Water and sewage treatment is not what you'd generally call a "fixed cost" since it involves ongoing operational costs (labor, chemicals, etc.). On the other side, usage fees are split into a fixed-cost portion (the connection charge, which runs $30-70k) and a variable-cost portion (per-gallon charges).

brewdad 7y ago
You can tweak the balance between fixed and usage charges though. I've lived places where the fixed amount of my water bill was maybe $10-$15/mo while a unit (~750 gallons) of water was about $5. My current home, at the other extreme, has almost $90/mo in fixed charges while a unit of water runs about $1. Not nearly the same incentive to conserve water but I am much more confident that my city will still be able to service the infrastructure 20 years from now.
colechristensen 7y ago
The capital cost of treatment facilities is enormous and fixed. The operating cost of those treatment facilities changes very little per gallon comparatively.