Analysis of Lost Creek Water Usage y g and Research on Residential Water Pricing and Conservation

for Lost Creek MUD Lost Creek Neighborhood Association September 19, 2011 Paul Schumann

Summary
• Austin is increasing the wholesale price of water to the LCMUD by 19%. • The tiered (increasing block) p ( g ) pricing structure for residential water g approved by the LCMUD board would have produced an effective rate of $4.61 (2009) and $4.54 (2010) per 1,000 gallons for residences • Matching a tiered (increasing block) pricing structure with a fixed supply cost and forecasting future usage is extremely complicated and difficult • Residential water demand is inelastic (‐0.35) with price • Residential water demand is elastic (+3) with temperature • Residential water demand is the largest (86%) • Residential indoor water use is approximately 7,400 gallons per residence per month (43%) • Residential outdoor water use is approximately 10,000 gallons per residence per month (57%)
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Summary (cont.)
• Water savings as a result of increased pricing is roughly the same for an increasing block or flat rate (5%) • W Water use is not correlated with rain amounts i l d ih i • Distribution of water users varies significantly by month • Residences near the boundaries of increasing block pricing structure are affected most (positively and negatively) • Water conservation results are highly variable, subjective and controversial • Best indoor water conservation study indicated 17% reduction through 100% implementation of best plumbing practices and products • For LCMUD largest water use is residential outdoor. Impacts to that can only be achieved through radical changes to landscaping

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RESIDENTIAL WATER USE ANALYSIS

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Water Users (2009 ‐ 2010)

2%

10%

2%

Residential Irrigation Commercial Condos

86%

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Monthly Water Use by Type
35,000

30,000

25,000 25 000

Water use (1,000 gals)

20,000 Residential Irrigation 15,000 Commercial Condos

10,000 ,

5,000

0

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Monthly Use
40,000

35,000

30,000

Monthly Water Use (1,000 gals)

25,000

Condos 20,000 Irrigation Commercial 15,000 Residential

10,000

5,000

0

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Average Monthly Use
600

500

A Average Monthly Use per Client (1,000 gals) )

400

Residential 300 Irrigation Commercial Condos 200

100

0

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Temperature Dependence
35,000

30,000

25,000 25 000 Total Monthly Water Use (1,000 gals)

20,000 Residential Irrigation 15,000 Commercial Condos

10,000

5,000

0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 90.0 Average Monthly Temperature (Degrees F)

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Water Use Correlation with Temperature
Type Residential Irrigation Commercial Condos Correlation 0.85 0.83 0.71 0.74

Correlation coefficient is a statistical measure of the linear relationship between two variables. It ranges between – 1 and +1. The residential water use with rain was ‐0.09.

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Residential Monthly Use
35,000

30,000

25,000 25 000 Monthly Water use (1,000 gals)

20,000 Data Base 15,000 Temperature Calculated

10,000

5,000

Residential indoor water use based on 1,000 residences and external research.

0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 90.0 Average Monthly Temperature (Degrees F)

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Tiered Rate (Increasing Block) Structure
Residential (1,000 gals per month) Up to 10 11 to 35 Over 35 Rate (per 1,000 gals) $4.09 $4.69 $6.40

Adopted by the LCMUD Board at the last meeting. Reported as equivalent of a $4.49 flat rate. The flat rate is based on Austin’s g Wholesale flat rate of $4.01. This base rate from Austin is 18.6% higher than the current rate of $3.38 per thousand gallons.

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2009
100%

90%

80%

70%

Percent of Residenes

60%

50%

<11 11 to 35

40%

>35

30%

20%

10%

0% Jan Feb Mar Apr May Jun Month Jul Aug Sep Oct Nov Dec

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2009
35,000

30,000

25,000 25 000

Use (1,000 gals)

20,000 <11 11 to 35 15,000 >35

10,000

5,000

0 Jan Feb Mar Apr May Jun Month Jul Aug Sep Oct Nov Dec

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Tiered Pricing Structure (Increasing Block)
$6.40

>35,000 gals

$4.69 $4.09

11,000 to 35,000 gals <11,000 gals

500 Residences

450 Residences

50 Residences
15

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Impact of Tiered Pricing (increasing Block) on Residential Average Price
Year Effective Average Price* Target Average Price Difference Percent Difference 2009 $4.61 $4.49 $0.12 3%** 2010 $4.54 $4.49 $0.05 1%**

* Price per 1,000 gals ** Difference probably due to inclusion/exclusion of condos

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Comparison of Frequency Distributions
900

800

Total water use = 7,426
700

March 2010 and July 2009 were the lowest and highest water use months in 2009 ‐ 2010 Read the first data point for March 2010 as: There were 857 residences that used between 0 and 10,000 gallons of water in March of 2010.

600 Numer of Residence

500 Mar10 400 Jul09

300

200

Total water use = 32,122
100

Note High Users

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 Monthly Water Use (1,000 gallons per residence)

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Number of Residences in Tiers (2009 ‐ 2010)
900

800

700

600 Number of Residences

500 >35 11 to 35 400 <11

300

200

100

0

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Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Schumann

Jul Aug Sep Oct Nov Dec

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Tier Pricing (Increasing Block) Difficulties
• 12 equations (monthly) • 6 unknowns k • Distribution changes month to month • Pricing and conservation programs affect di ib i ff distribution • Distribution changes year to year
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{(P1 X V1) + (P2 X V2) + (P3 X V3)} PW = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ + CO (V1 + V2 + V3) PW – wholesale price P1 – first block price P2 – second bl k price d block i P3 – third block price V1 – first block volume V2 – second block volume V3 – third block volume CO – overhead cost
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WATER PRICING RESEARCH

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US Residential Price Structures
Price Structure* Decreasing Block Uniform Price Increasing Block 1996 36% 32% 32% 1998 35% 34% 31% 2000 35% 36% 29% 2002 30% 36% 30%

* Block – prices are tiered (flat over regions), regions) decreasing – price goes down as volume increases, increasing – prices go up as volume increases

Source: Reference 6

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Price Elasticity for Residential Water
Source Nataraj (1995), Reference 5 Olmstead (2007), Reference 6 Stevens (1992), Reference 6 Stevens & Kesisoglou (1984), Reference 6 Males (1979), Reference 6 Turnovsky (1962), Reference 6 Turnovsky (1965), Reference 6 Espey (1997), Reference 6 Dalhuisen (2003), Reference 6 Olmstead (2006), Reference 6 & 7 Price Elasticity ‐0.15 to ‐0.25* ‐0.3 to ‐0.4 ‐0.10 to ‐0.69 ‐0.10** to ‐0.38 ‐0.32 ‐0.05 to ‐0.40 ‐0.29 to ‐0.41 ‐0.51****, ‐0/38**, ‐0.64*** ‐0.41**** ‐0.33

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* High use consumers. Higher if near lower boundary of block pricing ** short run Price elasticity – ratio of % change in demand for a 1% *** long run change in price **** median (http://en.wikipedia.org/wiki/Price_elasticity_of_demand)
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Estimated Residential Water Use Savings
• 2009
– ‐11,213,000 gallons – ‐ 5.2%

• 2010
– ‐9,419,000 gallons – ‐ 4 7% 4.7%
* Based on median best estimate of price elasticity of ‐0.35, Reference 6 ** Based on equivalent weighted average tier (increasing block) prices *** If pricing structure was in place for one of those years **** Flat rates produce the same savings
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WATER CONSERVATION RESEARCH

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Summary of Conservation Methods
Type Price* Conservation Both** Average 35% 26% 18% Low 5% 13% 6% High 69% 37% 37%

Reduction in water used based on method. *Based on 100% increase in price ** Unknown price increase

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Estimates of the Base (Indoor Use) of Residential Water Use
Method Average of Non Watering Months A fN W i M h Trend Line Non Watering Months Lowest Month Based on Research* Based on Calculation from Research** Based on Calculation from Research** Based on Research**** Indoor Use (1,000 gallons/month/residence) 11.8 11 8 10 7.4 7.3 6.2 8.3 4.5 5.3 45‐53 ****Reference 2

Reference 1 *41.9% average indoor use ** 69.3 gallons per capita per day, 3 persons per residence *** 69.3 gallons per capita per day, 4 persons per residence
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Average Water Use
Category Water Use (gallons per capita per day) 1.2 15.0 1.0 10.9 9.5 11.6 18.5 1.6 69.3
Schumann References 1 and 3

Percent of Indoor Water Use 1.7% 21.6% 1.4% 15.7% 13.7% 16.7% 26.7% 2.3%

Standard Water Use (gallons per capita per day)

Conservation Water Use (gallons per capita per day) 1.2 10.0 0.7 10.8 4.0

Baths Clothes Washers Dish Washers Faucets Leaks Showers Toilets Other Total
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13.4 19.5 72.1

8.8 ‐ 11.3 8.2 ‐ 9.5 1.6 45.2 ‐ 60.0
27

Examples of Water Conservation Programs (Reference 4)
City Albuquerque, NM Program Water rates, public education program, high efficiency pluming program, l d ffi i l i landscaping program, i large use program System leak detection & repair, water rates, showerhead replacement program, toilet retrofits & replacement Public education, landscape and irrigation codes, toilet flapper rebates, residential audits, conservation rate structure, new homes points program, landscape water budget, water reclamation facility Accurate meter reading and system map, leak detection and repair program Building code requirements, increasing block water rate structure, metering program, public education, low water use landscaping program Pluming retrofits, high efficiency toilets, high efficiency shower heads, increased rates
Schumann

Results Peak demand in 2002 down 14% from 1990 f Water savings of 395,000 gallons per day (16% of winter usage) and reduction in wastewater volume Estimated 16% by 2028 (4.6 mgpd)

Ashland, OR

Cary, NC

Gallitzin, PA Gilbert, AZ

87% drop in unaccounted for water, 59% drop in production Successful in reusing reclaimed water 30% drop in water use
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Goleta, CA
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Examples (cont.)
City Houston, TX Program Education program, plumbing retrofits, audits, leak detection and repair, increasing block rate schedule, conservation planning Five tiered rate structure Leak detection and repair, plumbing retrofits, water management programs, education program, meter improvements Plumbing fixture replacement, water efficiency surveys, irrigation improvements, training programs, conservation related research projects Education, metering, leak detections, water use regulation, comprehensive toilet replacement program Pricing reform, residential and industrial/commercial conservation, landscaping, education, technical assistance, regulations, planning and research, Schumann interagency coordination Results Reduction in water demand of 7.3%, savings of $260 million 19% decline in water use 24% drop in water use over ten years Savings of 59 mgd Irvine Ranch Water District, CA Massachusetts Water Resources Authority Metropolitan Water District of Southern California New York, NY

Reduced per capita water use from 195 gpd (1991) to 167 gpd (1998), 14%. Reduced water/waste water bills by 20% to 40% Saved 40mgd. Conservation rate structure saved 9 mgd.

Phoenix, AZ

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Examples (cont.)
City Santa Monica, CA Seattle, WA Program Water use surveys, education, landscaping, toilet retrofits, l d program il fi load Seasonal rate structure, plumbing fixture codes, leak reduction, incentives for water saving products, public education High efficiency plumbing retrofits, increasing block rate structure, irrigation restrictions, landscaping measures, public education Integrative resource planning Replacing inefficient showerheads and R l i i ffi i h h d d toilets Results Reduced water use by 14% and waste water fl b 21% flow by Water consumption dropped by 20% 25% drop in water use from landscaping program, 15% reduction from retrofit program 27 conventional and nonconventional resource options Reduced R d d water fl b 14 5 gpd flow by 14.5 d

Tampa, FL

Wichita, KS Barrie, B i ON

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References
1. 2. 2 3. 4. 5. 6. Nature of Residential Water Use and Effectiveness of Conservation Programs, James Heaney, William DeOreo, Peter Mayer, Paul Lander, Jeff Harpring, Laurel Stadjuhar, Beorn Courtney and Lynn Buhlig, http://bcn/boulder.co.us/basin/local/heaney.html Residential Water R id ti l W t use T d i N th A Trends in North America, Th i Thomas R k Rockaway, P l C Paul Coomes, J h Ri d Joshua Rivard and Barry Kornstein, Journal of the AWWA, February 2011, http://www.awwa.org/files/Resources/Waterwiser/JAW0211rockaway.pdf Water Use Statistics, American Water Works Association, Drinktap.org, http://www.drinktap.org/consumerdnn/Home/WaterInformation/Conservation/WaterUseStatisti cs/tabid/85/Default.aspx Cases in Water Conservation: How Efficiency Programs Help Water Utilities Save Water and Avoid Costs, EPA, 2002, http://www.epa.gov/WaterSense/docs/utilityconservation_508.pdf Do Residential Water Consumers React to Price Increases?: Evidence from a Natural Experiment in Santa Cruz, Shanthi Nataraj, Giannini Foundation of Agricultural Economics, University of California, http://giannini.ucop.edu/media/are‐update/files/articles/v10n3_3.pdf Managing Water Demand: Price vs. Non Price Programs, Sheila Olmstead & Robert Stavins, A emand: Non‐Price Pioneer Institute White Paper #39, Pioneer Institute, July 2007, http://www.hks.harvard.edu/fs/rstavins/Monographs_&_Reports/Pioneer_Olmstead_Stavins_W ater.pdf Does Price Structure Matter?: Household Water Demand Under Increasing‐Block and Uniform Prices, Sheila Olmstead, W. Hanemann & Robert Stavins, School of Forestry and Environmental Studies, Yale University, 10/30/03, http://www.esm.ucsb.edu/academics/courses/595EE/Readings/olmstead_hanemann_stavins.pdf

7.

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APPENDIX

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Dependence on Rain
35,000

30,000

25,000 25 000

Water Use (1,000 gals)

20,000 Residential Irrigation 15,000 Commercial Condos

10,000

5,000

0 0.0 1.0 2.0 3.0 4.0 Total Rain Fall in Month 5.0 6.0 7.0 8.0

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Residential Use per Month
9.0

8.0

7.0

Size of disks proportional to monthly residential water use

60 6.0

5.0 Rain (in per month)

4.0

3.0

2.0

1.0

0.0 40 ‐1.0 50 60 70 80 90 100

‐2.0

Average Temperature per Month (Degree F)

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209,000 Lost Creek (2009‐2010)

Reference 2

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Reference 2

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Residential Indoor/Outdoor Water Use
City Boulder, CO Denver, CO Eugene, OR Las Vigenes, CA Lompoc, CA Phoenix, AZ San Diego, CA Scottsdale/Tempe, AZ Seattle, WA Tampa, FL Walnut, CA Waterloo, ON Average Lost Creek 9/19/2011 Total (1,000 gals/year) 134.1 159.9 107.9 301.1 103 172.4 150.1 184.9 80.1 98.9 208.8 69.9 147.6 208.7 Indoor (%) 42.8% 40.3% 59.2% 23.8% 61.1% 41.3% 37.2% 33.5% 61.8% 54.5% 36.1% 77.7% 41.9% 42.5% Outdoor (%) 57.2% 59.7% 40.8% 76.2% 38.9% 58.7% 62.8% 66.5% 38.2% 45.55 63.9% 22.3% 58.1% 57.5% 37

Reference 1 Schumann

Residential Indoor Water Use (gallons per day per residence)
Study Toilet Washing Machine Shower Faucet Leak Other Bath Dishwasher Total Reference 2
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REUWS 45.2 39.3 30.8 26.7 21.9 7.4 3.2 2.4 176.9

Denver Water 38.6 31.5 28.9 21.5 24.5 5.7 2.9 2.0 155.6

LWC 37.5 32.4 18.4 20.5 33.8 4.0 3.1 1.9 151.6

Author
• • • • Paul Schumann 512.632.6586 (cell) 512.327.5449 paschumann2009@gmail.com

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