Designing Water Rate Structures for Conservation and Revenue Stability

February 2014

Water pricing can be one of the most effective methods to driving conservation and it is also the primary mechanism for recovering the revenue that a water utility needs to protect public health and the environment.  The Environmental Finance Center at the University of North Carolina and the Sierra Club, Lone Star Chapter have written a report to help Texas water utilities use their water rates and financial policies to encourage customers to reduce their water use while maintaining the financial viability of the utility.

Download PDF

View Webinar Recording

Download  Webinar Slides

Webinar Q&A Transcript

Webinar Information:  UNC and the Sierra Club hosted a webinar on March 19 that focused on the findings and recommendations of our new report that explores the relationship between water pricing, water use, and revenue stability in the State of Texas.  The webinar addresses how utilities can strike a balance between conservation and revenue stability and introduce rate structures, billing options, and financial practices that will help utilities advance water conservation objectives without undercutting needed revenue stability.


Desalination: Is it Worth its Salt?

November 2013

Desalination is often viewed as a solution to many water supply problems and is often hailed as a ‘drought resistant’ supply. This report explores the environmental, energy, and economic issues surrounding desalination and provides an overview of desalination activities in Texas.

Download PDF


Does Water Conservation have to be the Enemy of Financial Stability?

National Geographic NewsWatch, July 16, 2014

Pricing is a powerful tool for shaping behavior, including water use. Recognizing the power of pricing, more water utilities are adopting water rates designed to encourage customers to conserve. These so-called “conservation rates” vary in form, but generally they increase the price per gallon of water the more water a customer uses. Across the country, utilities can testify to the power of pricing by pointing to their decreased water sales. This is great news from a conservation standpoint, but the unintended result can be unexpected reductions in revenue.

The need for more reliable revenue is more important than ever, as water service providers contend with prolonged droughts and aging infrastructure. Unfortunately, this need for revenue can make conservation the unwanted stepchild of water utilities.

The good news is that there are more tools than ever to help water systems anticipate the potential volatility of future revenues.

Go To Article Online   Download PDF

Texas city using treated wastewater for drinking

Houston Chronicle, July 9, 2014

Wichita Falls, near the Oklahoma border, on Wednesday began reusing millions of gallons of water at the River Road Waste Treatment plant that’s been purified to meet government drinking standards. The water is then sent by a 12-mile pipeline to the Cypress Water Treatment Plant for additional purification.

The Texas Commission on Environmental Quality approved Wichita Falls’ proposal for a toilet-to-tap reuse program for up to six months.

Wichita Falls is operating under a Stage 5 drought catastrophe, in which outdoor watering is banned and conservation is urged. Demand for city water has dropped 45 percent, according to City Manager Darron Leiker.

Still, the city’s reservoirs are on a trajectory to run dry by August 2016, according to the Texas Water Development Board.

Go To Article Online   Download PDF

Opinion: Texas water plans must consider endangered species

San Antonio Express News, July 7, 2014

The 5th Circuit Court of Appeals ruled recently that Texas did not violate the Endangered Species Act, or ESA, through the operation of its surface water permitting program.

The long-awaited opinion reverses a Corpus Christi district court decision holding that the Texas Commission on Environmental Quality caused the deaths of 23 endangered whooping cranes during the drought of 2008 and 2009.

The lower court had found the agency harmed the cranes indirectly by authorizing cities, farmers and river authorities to divert water from the San Antonio and Guadalupe river basins. The diversions reduced freshwater inflows into Aransas Bay, where the cranes spend their winters, increasing salinity levels and decreasing the wolf berries and blue crabs the birds depend on for food.

Go To Article Online   Download PDF

Should Austin conserve more water? Yes, task force says

Austin American Statesman, July 6, 2014

As Texas’ drought persists, the Austin City Council recently asked a group of volunteers to spend two months weighing ideas for new water supplies that the city could pursue to slake Austin’s thirst.

But the group — 11 people, many of whom have backgrounds in water policy — spent more time talking about conservation than they did poring over proposals to find more water elsewhere.

The group’s conclusion: Austin should be far more aggressive about saving the water it has before turning to expensive and logistically difficult sources, such as building pipelines to pump in water from far-flung places.

Go To  Article Online   Download PDF

Down the drain: Nearly 300 million gallons of water for 10 Texas cities in 2013

Lubbock Avalanche Journal Online, June 28, 2014

The state’s 10 largest cities flushed nearly 300 million gallons out of water mains and down the drain last year.

About a third of that was in Houston alone.

Municipalities are required by state law to circulate dead-end lines monthly to safeguard the public’s water. So, flushing is out of local control. But city planners can, and do, limit or reduce the number of dead-end lines that require the monthly flush…The amount of water flushed annually in these Texas cities in most cases is less than half of 1 percent of each city’s overall water use.

Still, residents are often shocked to see a fire hydrant gushing water into the street, especially during a lingering drought when conservation efforts champion the mantra that every drop counts.

Go To Article Online  Download PDF