Your water bill: Different path, same goals

The good, the bad and the confusing about next year’s water rates

This example shows what a bill would like for a customer in the city of Denver if their average winter consumption was 5,000 gallons and they used an additional 10,000 gallons one month.

This example shows what a bill would like for a customer in the city of Denver if their average winter consumption was 5,000 gallons and they used an additional 10,000 gallons one month.

By Travis Thompson

Imagine if we encouraged people to use as much water as they wanted, instead of only what they needed.

We’d have more money available to invest back into an aging and critical system that more than 1 million people — and counting — rely on for survival every day.

Alas, we don’t have that luxury. Coloradans know better. We can’t simply produce more water, so we will always have to use this precious resource efficiently — a fact recently underscored by the Colorado Water Plan.

But that reality also wreaks havoc on our cost-of-service financial system.

For the past 20 years, the way we’ve charged for water helped drive home the importance of conservation with one simple notion: The more you use, the more you pay.

We kept our fixed monthly charge very low, with a four-tiered consumption charge that increased with the amount of water you used. So a single-family residential customer in Denver paid $6.74 every month and then would pay from $2.75 up to $11.00 per 1,000 gallons, depending on the amount of water they used in each tier.

But a lot has changed in two decades. Our customers have adopted more efficient water use habits (that’s a good thing), cutting their average consumption by more than 20 percent in the last 10 years. And at the same time, our climate conditions have become far less predictable, creating more frequent, extreme weather. That means our revenue is inconsistent, making it harder to plan for and complete repairs and upgrades to our system.

So here’s the good, the bad and the confusing about your new water bill, coming April 2016:

The good: Three tiers, not four

The focus remains on efficient water use — we don’t have a choice in our semi-arid climate — by keeping a tiered structure that charges more for inefficient use.

Because water used indoors is for cooking, bathing, drinking and hygiene, we consider this to be essential for human life and assign this the lowest rate. So we’ll calculate your indoor use by taking your average winter consumption (when you’re not watering your lawn — we hope) to determine how much water you need indoors. Each month, the amount of water you use up to your average winter consumption will be charged at the lowest rate per 1,000 gallons.

That means, if you live in Denver and your average winter consumption is 5,000 gallons, you’ll pay $2.60 per 1,000 gallons up to 5,000 each month.

We also understand the value of having landscapes for gardens or kids and pets to play on. (It’s the reason we provide tools to help with this.) So customers will be allotted an additional 15,000 gallons — what it takes to water an average-sized yard efficiently — for outdoor use, which falls into a second, higher-priced tier at $4.68 per 1,000 gallons.

Anything above that will fall into the third, highest-priced tier at $6.24 per 1,000 gallons, as this is considered inefficient water use, such as over watering your landscape. The more you use, the more you pay. Sound familiar?

The following chart shows how the price per tier compares this year to last. You’ll also notice that the service charge is higher (more on that in a moment).

The average winter consumption (AWC) in the new structure will be determined by averaging the customer’s monthly water consumption on bills dated January, February and March, which is a way of determining essential indoor water use. Chart compares service charge for customers with a ¾-inch meter and tiers for residential customers in the city of Denver.

The average winter consumption (AWC) in the new structure will be determined by averaging the customer’s monthly water consumption on bills dated January, February and March, which is a way of determining essential indoor water use. Chart compares service charge for customers with a ¾-inch meter and tiers for residential customers in the city of Denver.

So does this mean your bill will be higher or lower? Bottom line: With the new individualized bills, it is completely dependent on how you use water.

The bad: Increases

In the past, when water use was low because of a rainy summer or one filled with drought restrictions, we relied on financial reserves to help make up that deficit. But we’re now seeing multiple years with extreme weather swings, causing more frequent dips in revenue. The result is a less reliable revenue stream for us, resulting in more variable rate increases for our customers.

Here’s the reality: The price to collect, store, treat and deliver water is based mostly on fixed costs. No matter how much water is used, we still need to maintain and operate more than 3,000 miles of distribution pipe, 19 reservoirs, 22 pump stations, 30 underground storage tanks, four treatment plants and much more.

That makes it difficult to keep up with these increasingly common revenue swings.

To provide more stability, we’ve raised the fixed monthly charge on residential water bills to $8.79, up from $6.74. This fee takes into account the stress put on the system, and the cost is dependent on meter size. That means larger, commercial users will be billed at a higher fixed monthly charge.

This chart shows that this fixed monthly charge is still among the lowest in the Front Range.

The higher fixed charge will be balanced out by the new tiered structure, where the cost per 1,000 gallons will actually be less than in the current structure (see the rate structure chart above).

This new structure does not change the fact that the cost to deliver clean, reliable drinking water and provide fire protection increases every year. In fact, next year we’ll need an overall 3.8 percent revenue increase. This increase was factored in when we analyzed and created the water charges for 2016.

The confusing: No two customers are alike 

Because the first tier will be based on the amount each individual household uses in the winter, your bill will likely be different than some of your neighbors.

Let’s assume two neighbors both use 15,000 gallons in June. The neighbor with higher outdoor water use (more gallons included in the second tier) will end up paying more for the exact same amount of water. (Remember the emphasis on conservation?)

Even more confusing is that we have different customer classes and types. So when explaining an impact of a rate increase, or a billing structure, we can’t provide a one-size-fits-all number. Everyone is affected differently, depending on your relationship with water.

 

Change is hard. And we’re not alone. The value and price of water is a much-discussed topic across the nation. And, as our good friends at DC Water explained, communication is vital.

That’s why we’ll keep on talking about this as we get closer to April, when the new billing structure kicks in, from informational pieces in your water bills to more information and tools on our website.

Stay tuned.

 

Note: Fixed service charge is dependent on meter size and suburban, commercial and recycled customers will see different charges in each tier. See the full rates chart for treated water here.

31 responses to this post.

  1. Posted by no thanks on December 21, 2015 at 10:06 am

    Wow! A 100% increase to water outdoors on top of a $25 yearly increase in minimum billing. So if you want your water bill to remain about the same you need to decrease outdoor consumption by 50%. This might be the largest water hike ever. That said, I do support this overall as it does make it more fair and does not increase the cost of water one needs to live.

    However, I wonder about those who now have $100 summer bills when it goes up to roughly $175. Is the greater Denver Water customer ok with this or will we see DW customer outrage? We should know by late September or October when the bills come in.

    The article states: “So does this mean your bill will be higher or lower? Bottom line: With the new individualized bills, it is completely dependent on how you use water.”

    Question: Can the writer show a single case where a water bill will be lower if the customer continues using water the way they always have?

    Probably best to just leave off the “or lower”

    Denver Water has always had great messaging, I do hope they are a little more clear as summer approaches with the message that your outdoor water use bill will DOUBLE. The message of conserve and use what you need is fantastic but I don’t think most water users expect a 100% increase and therefore will not plan for it.

    Reply

    • Posted by Denver Water on December 22, 2015 at 1:04 pm

      We can assure you that this is not a 100 percent increase or an effort to double water bills. Your example of a typical customer with $100 monthly summer bill would actually increase by about $4, not $75. Here’s how we figured that out. The monthly consumption for someone who paid about $100 on their summer water bill was 23,000 gallons. A customer with a use of 23,000 gallons of water will go from $102.99 in 2015 to $107.07 (a $4.08 increase) in 2016 under the new rate structure and revenue requirement increase.

      One of the greatest challenges of communicating this structure change is the individualized nature. That is why we’ll continue to develop more informational pieces and tools so customers will better understand this structure and how it will impact their bills.

      Reply

    • Posted by donstarr on December 28, 2015 at 1:20 pm

      “Question: Can the writer show a single case where a water bill will be lower if the customer continues using water the way they always have?”

      Sure. If your monthly indoor use is 5,000 gallons and you use an additional 43,000 gallons outdoors Apr-Oct, your annual cost would go from $2286 under the old structure to $1976 under the new structure.

      Reply

    • Posted by donstarr on December 28, 2015 at 2:17 pm

      “those who now have $100 summer bills when it goes up to roughly $175”

      If indoor use remains constant throughout the year (and from 2015 through 2016), that kind of increase can’t happen. The biggest percentage increases will be for those who have very low (1000 gallons per month) indoor use Jan-Mar and 11,000 gallons total use in the summer. Their summer bill will go from $36.99 to $58.19, a 57% increase.

      Someone who uses 5,000 gallons per month Jan-Mar (“indoors”) and 23,000 gallons per month during the summer (5,000 indoors, 18,000 outdoors) will see their summer bill go from $102.99 to $110.71 – an increase of 7.5%. Not 75%.

      Even if you used only 1000 gallons per month Jan-Mar, the largest dollar increase you’d ever see is if your total summer use was 30,000 gallons, and even then you’d only see a $27.46 monthly increase (from $141.49 in 2015 to $168.95 in 2016).

      Reply

  2. Posted by sporobolus on December 22, 2015 at 2:23 pm

    i posted a comment, and am getting notifications of further comments (which confirms that i clicked the Post Comment button), but my comment is now gone

    i said i was unhappy that the highest tier is now a lower rate, because that reduces the incentive to conserve; is that something Denver Water doesn’t want me to say?

    Reply

    • Posted by Denver Water on December 22, 2015 at 3:47 pm

      Sorry for the delay in approving and responding to your original comment. And, we appreciate your support for conservation!

      It is absolutely essential that we all continue to use water efficiently to ensure there will be an adequate supply for everyone in the years to come.

      In our current (old) four-tiered rate structure, customers are charged the lowest rate for up to 11,000 gallons of water. Because nearly 80% of residential customers in Denver use 11,000 gallons or less every month, even outdoor use could fall within the first tier. So, through the new rate structure we separated essential indoor water use from outdoor water use so that outdoor watering will cost more than indoor use and those who use water inefficiently will pay the highest rates.

      Reply

  3. Posted by sporobolus on December 22, 2015 at 7:33 pm

    thanks for posting my newer comment in lieu of the one i made on the 18th

    there is definitely some merit to basing the lowest tier on winter usage, though it will end up rewarding some who are inefficient with water in the winter

    but this seems to have no relation to the reduction in rate of the highest tier; i see nothing in article or your reply that explains why the most extreme summer water wasters should pay less — there is a strong sense of disregard for conservation in this aspect of the new plan

    investigating this, i found some details which to me paint a different picture from what is described above …

    a brief description of the plan in the the agenda for the 16 Dec. 2015 Water Board meeting:

    http://www.denverwater.org/docs/assets/C09824B6-155D-01CB-0C7AEE88B1463F8B/Dec162015BoardAgendawithitems.pdf

    there is also mention of an Exhibit D in the 28 Oct. 2015 Minutes, but it seems to have been omitted from what has been publicly posted:

    http://www.denverwater.org/docs/assets/1B473B5A-155D-01CB-0C6650FD8FEDBED3/board-minutes-Oct28.pdf

    the former clearly states that Denver Water is plaining to move even further toward higher fixed fees and lower usage fees, something that isn’t mentioned at all in this article; if Denver Water 1) increases the portion of expenses covered by fixed fees, and 2) reduces the usage charge at the highest tier, then it is absolutely reducing the incentive for conservation

    Reply

    • Posted by Denver Water on December 23, 2015 at 2:45 pm

      Conservation has been – and will continue to be – an important part of our strategy to ensure our customers have water in the future. The great news is that Denver Water users have embraced conservation, and water use has declined 22 percent over the past decade.

      Which is part of the reason for the switch. As you saw from the documents you cited in your comment, we needed to create a tier threshold that better represents current demand so it can continue to encourage conservation. But, we also had to develop it in a way to switch from such a heavy reliance on usage to a more stable fixed fee to create more revenue stability.

      The tiered rate structure is only one of many programs and tools that we have to ensure our customers continue to use water efficiently. Our conservation program includes rebates and incentives for residential and commercial customers, summer water use rules to reinforce best practices for outdoor watering, requirements for new properties to amend their soil (to make it retain more water) and much more. Not to mention our strong messaging, campaigns and educational programs that continue to create a greater understanding of the issue of water scarcity and the importance of efficiency.

      It sounds like you would like a more technical conversation regarding this topic. Please send an email to publicinformation@denverwater.org so we can appropriately address your specific concerns.

      Reply

  4. Posted by Don Starr on December 28, 2015 at 1:16 pm

    The interesting part is that someone who uses lots of water outdoors will actually pay less under the new rate structure than under the old.

    Presuming “indoor only” use November through March (5 months) and “indoor plus outdoor” use April through October (7 months):

    Someone who uses 5,000 gallons indoors and 43,000 gallons outdoors would pay about $2286 annually under the old structure, but only about $1976 under the new structure. He saves $310 (about 14%) per year.

    Someone who uses 3,000 gallons indoors and 10,000 gallons outdoors would pay about $411 under the old structure and $527 under the new structure. He sees an annual increase of $116 (about 28%).

    Reply

    • Posted by Denver Water on December 29, 2015 at 3:07 pm

      Thank you for your detailed review, comments and analysis! We appreciate you taking the time to respond and wanted to provide a bit more context and a minor clarification.

      While these scenarios (and the scenarios you mention in your comments above) could occur, these types of usage patterns are rare. The majority of residential customers will have one or two months of peak water use during the warmest, driest months of the summer (not seven straight months of peak water use).

      In the examples with customers who use less than 5,000 gallons per month, those customers would be given a Tier 1 allowance of 5,000 gallons every month. So, using your example of a customer who uses 3,000 gallons per month in the winter and 13,000 gallons per month in the summer, that individual would be charged for the first 5,000 gallons at the Tier 1 rate and the remaining 8,000 gallons at the Tier 2 rate. In this example, the annual bill under the new structure would be $497.58.

      If you’d like to have a more detailed discussion about the new rate structure, please email publicinformation@denverwater.org, and we would be happy to chat further.

      Reply

      • Posted by donstarr on December 30, 2015 at 12:00 pm

        That’s interesting, and is something that hasn’t been described. Let me see if I have it right. If T is the total usage for January through March:
        * If T >= 15,000 gallons: monthly indoor allotment = T / 3
        * otherwise (T < 15,000 gallons), monthly indoor allotment = 5,000
        That is, the monthly indoor allotment is the greater of a) average Jan-Mar usage and b) 5,000 gallons.

        Is that correct?

      • Posted by Denver Water on December 31, 2015 at 10:58 am

        If we are understanding your comment correctly, that’s mostly correct, with one additional clarification. If your average winter consumption (average per month use from January to March) is greater than 15,000 gallons (or more than 45,000 gallons total for those three months), then your Tier 1 allowance would max out at 15,000 gallons. Anything beyond that would be charged at a higher rate.

        We are working to have this additional rates information available at denverwater.org soon to help clarify these details.

  5. Really when someone doesn’t knoow afterward itss up to other users that they will help, so
    here it happens.

    Reply

  6. Posted by Julian on January 16, 2016 at 8:39 am

    I use about 5000 gallons in winter and 10000 gallons in summer. Based on the new rate structure my summer bill will increase by about 70%. Based on old rates I paid in summer about $34 and now I will be paying about $58. I think people should be alerted if not outraged. I think my case is very common for a single family household. I wonder how Denver Water can respond to this?

    Reply

    • Posted by Denver Water on January 19, 2016 at 4:34 pm

      With the new individualized structure, it is difficult to provide a general example for all customers, so we recommend that you speak with our customer care team. They can provide you with a more accurate estimate of your water use and bill impacts under the new structure. You can either send an email to publicinformation@denverwater.org or call us at 303-893-2444.

      When the existing rate structure was put in place 20 years ago, residential customers used 9,000 gallons indoors, on average. Now, the majority of residential customers use 5,000 gallons or less indoors. So, we had to change the tier’s to better reflect this usage, which means outdoor use is now in the next-priced tier instead of the first.

      That means, in the example you provided, the increase would be closer to 6 percent (about $1.30) per month in the winter and 30 percent (about $9) per month in the summer for a customer living in Denver. But, there are many variables so these numbers will certainly fluctuate depending upon your water use each month and whether you live in Denver or are served by a suburban distributor under contract with Denver Water.

      Reply

  7. Posted by KATHARINE DICKSON on January 30, 2016 at 1:53 pm

    I am concerned because I don’t live in Denver for all of February and March. I also try to conserve the rest of the year, but have quite a large yard fully planted with trees and perennial gardens. What do you suggest I do in this case?

    Reply

  8. Posted by Phil on February 6, 2016 at 7:02 pm

    Where is the rate table for those that do not Live in Denver proper?

    Reply

  9. Posted by Anonymous on February 20, 2016 at 1:23 pm

    We live in a community and the HOA doesn’t do a good job using water efficiently in the community home owners front yards. Unfortunately, the owners are responsible to pay the front yard water bill which gets exponentially high – often between $150-200 during summer months. Does Denver Water plan to outline daily time limits and day(s) restrictions in 2016? Because unless you spell out the restrictions water will likely be misused resulting in even higher water bills especially with new rates effective April 2016 when water usage shoots over 40,000 gallons/month. To give you an example, as of last year our HOA turned water 5-6 days a week and often times twice or thrice a day which is what we call misuse and waste of water. We recommend 2-3 days a week and one time in 24 hours, not multiple times. Thanks for coming up with a written policy and communicating to the communities*. Thanks again!

    *Note: This comment has been altered to remove reference to specific customer location information, per Colorado law.

    Reply

    • Posted by Denver Water on February 29, 2016 at 4:50 pm

      Thank you for your comment and your interest in saving water and minimizing your water bill. We assure you we share that passion. In 2016, Denver Water will implement our annual summer watering rules, which require customers to water only between 6 p.m. and 10 a.m. These rules will be in place from May 1 to Oct. 1, during which time we also limit watering to no more than three days per week. We work closely with some large properties, such as parks, schools and community associations, to create a water budget, providing them with more flexibility on the number of days they are watering, as long as the amount fits within the water consumption target for that landscape.

      We do not set run-time limits per zone because some irrigation systems actually work best using less water over a longer period of time. Also, watering in increments during appropriate watering hours gives soil time to absorb water properly. This allows water to travel further into the soil where the grass roots are, creating a healthier lawn while using water as efficiently as possible. You can find more about irrigation best practices, such as this “cycle and soak” approach, here.

      Since it seems you have some specific concerns about your community’s watering procedures, we recommend you reach out to your HOA and have them contact us directly to request a free consultation. It will help us learn more about water use on the property, and determine if the property is a good fit for our water budget program. Many times, we actually find customers are doing a much better job than they may have thought.

      Reply

  10. Posted by Teena Harvey on March 6, 2016 at 7:04 pm

    And what about those customers who are traveling for entire months of your averaging period so there is no usage for those months? It seems we are being penalized because we are not in town using water. Whom should we talk to about our concern and what a realistic amount of “AWC” for our situation is?

    Reply

    • Posted by Denver Water on March 7, 2016 at 10:57 am

      We are aware that there are some customers who travel or live in a different state during the time that annual winter consumption is determined. For this reason, Denver Water has set a minimum average winter consumption of 5,000 gallons. So even if you are not in your home during the winter, you will still receive an average winter consumption of 5,000 gallons, but will only be charged for the water you use. Throughout the rest of the year, when you are using water, the amount of water you use up to 5,000 gallons will be charged at the lowest rate per 1,000 gallons.

      The minimum average winter consumption of 5,000 gallons was determined because most Denver Water residential customers use 5,000 gallons or less per month indoors, thanks to efficient water use habits and fixtures.

      We recommend that you speak with our Customer Care team. That way you can discuss more specifics regarding your bill and situation. You can either send an email to publicinformation@denverwater.org or call us at 303-893-2444

      Reply

  11. Posted by Teresa Tucker on April 9, 2016 at 8:12 pm

    I may have missed something in your explanation. My lowest tier water cost is $3.28, not $2.60 and second tier $5.90, not $4.68. Since my fixed monthly charge is $10.13 not $8.79, I am assume I am being charged a higher fee for the distance of pipes to my house and the distance the water has to travel. This seems to me to be a dual charge for the same product.

    Reply

    • Posted by Denver Water on April 11, 2016 at 2:56 pm

      Thanks for bringing this up. We realize that the article wasn’t clear on the fact that we used single family customers in Denver when talking about the bill impacts. So we’ve made some revisions to help clarify that point. Because the city’s charter requires us to charge more to customers who live outside the City and County of Denver, suburban customers have different rates in each tier. See the full rates chart for treated water here.

      Additionally, the fixed monthly charge is based on the size of the meter at a property. Typically, a single family home has ¾-inch, or smaller, meter that is billed at $8.79 each month. But, as the sizes increase so does the fixed monthly charge. A 1-inch meter is billed at $10.13 each month.

      Reply

  12. Posted by Dean on May 24, 2016 at 8:02 pm

    thanks for putting it to your customers again and again and again. It is disgusting that Denver Water does nothing to conserve on their end IE reducing wasteful spending, excess employees and just plain bad planning. The head of Denver Water generously every year gives away over $100,000 to a non-profit that he is a board member of. But this is not problem as he has the ability to just put the bill to us. Spin it all you want Denver Water but your annual increases far exceed inflation. Time to have the PUC regulate Denver Water

    Reply

  13. […] “I think it is somewhat much ado about little,” said Peter Mayer during our Connecting the Drops radio call-in show on water conservation. Mayer co-authored a new study Residential End Uses of Water, Volume 2, that’s lush with data on residential water use and conservation. Rainbarrels could save a user 1,000 to 1,500 gallons of water per year if used regularly, Mayer said. Although it sounds like a lot, 1,000 gallons likely costs only about $5 on your water bill, depending on your provider. Read about Denver Water’s recent changes to its rate structure here. […]

    Reply

  14. Posted by Kelly Honecker on July 4, 2016 at 7:34 am

    We just moved into our him in April. We are a family of three and the previous owner was a single lady living alone. To base our typical use off of what was used during winter is not appropriate in our circumstance as we were not the ones living in the house and, naturally, with two more people we consume more water so has we been here for the winter, our usage would have been higher. The winter comparison base for us if off and skewed. Is there a way to recalculate that?

    Reply

    • Posted by Denver Water on July 5, 2016 at 9:06 am

      Please reach out to our customer care team. That way you can discuss specifics regarding your bill and situation. You can either send an email to publicinformation@denverwater.org or call us at 303-893-2444.

      Reply

      • Posted by Teena on July 5, 2016 at 12:30 pm

        Good luck with the care team. We weren’t home for two and half months January through March and the “Care” team only explained their policy of giving us the minimum. We purposely didn’t water until after our May billing
        to show our actual usage. It doesn’t matter. They are a joke! I’m planning to contact the PUC.

  15. It’s really a cool and helpful piece of information. I’m happy that you shared this
    useful information with us. Please keep us informed like this.

    Thank you for sharing.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: