{"id":2392,"date":"2018-01-31T08:20:23","date_gmt":"2018-01-31T15:20:23","guid":{"rendered":"http:\/\/elmontgomery.com\/?p=2392"},"modified":"2022-12-06T17:07:47","modified_gmt":"2022-12-07T00:07:47","slug":"rate-setting-era-declining-demand","status":"publish","type":"post","link":"https:\/\/elmontgomery.com\/es\/hydro-notes\/rate-setting-era-declining-demand\/","title":{"rendered":"Fijaci\u00f3n de tarifas en una era de demanda decreciente"},"content":{"rendered":"

Community Water Company of Green Valley (CWC) is a non-profit public service corporation serving customers in Green Valley and Sahuarita for over 40 years.\u00a0 In July 2015, CWC filed a rate case with the Arizona Corporation Commission (ACC).\u00a0 As part of that filing, they argued that ongoing declines in per-customer water demand would likely continue and requested that this trend be reflected in their new rates.<\/p>\n

ACC staff initially rejected this part of CWC\u2019s rate request, stating that recent declines in demand could be due to random variations or temporary factors, such as climatic fluctuations. The ACC had previously rejected similar requests by other water utilities.<\/p>\n

CWC retained Montgomery & Associates (M&A) in December 2015 to perform a more thorough analysis of their declining demand. This included a time series analysis of CWC\u2019s historical demand and updating a dynamic simulation model of residential demand that M&A had previously built for them. In addition, a cross-sectional analysis compared CWC’s demand with nine other municipal water providers across Arizona for whom M&A had built demand models.\u00a0 Finally, econometric analysis was used to test the theory that CWC\u2019s recent demand reductions might be caused by climatic fluctuations.<\/p>\n

The results of these analyses were that CWC\u2019s declining demand was long-term, forecast to continue, and not caused by random factors or climate fluctuations. We also demonstrated that the falling demand experienced by CWC is far from unusual; in fact, it has become the norm.\u00a0 Water use in the US has been declining for decades, across all water use sectors \u2013 municipal, agricultural, industrial, and energy. Total groundwater and surface water withdrawals peaked in 1980 and have been declining ever since, nationally and for all regions of the country (see Figure 1).\u00a0 \"\"<\/p>\n

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Water use for all activities peaked at nearly 1,600 gallons per capita per day (gpcd) in 1980; by 2010, rates were under 1,000 gpcd.[i]<\/a>\u00a0 The surprising, but inescapable conclusion is that water demand is no longer tightly tied to population, economic output, or quality of life.<\/p>\n

The downward trend in municipal demand spans the West, and has been particularly robust in Arizona.\u00a0 Research by M&A on municipal water use in Maricopa and Pima Counties revealed significant declines in residential water use between 2000 and 2015 in 10 of 11 providers studied (see Figure 2).[ii]<\/a>
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In most cases, declines in per-household demand have more than offset increases in demand from growth, meaning that total deliveries of water have been dropping, even as service area populations have grown.\u00a0 Declines in total deliveries across Arizona\u2019s major metro areas have averaged 2.0% – 2.5% per year.\u00a0 In one striking example, Tucson Water delivered the same amount of potable water in 2016 as in 1985, despite more than a 70% increase in customers.\u00a0 Five main factors are driving these declines in municipal water demand:<\/p>\n

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  1. Indoor demand is being reduced by the gradual replacement of older fixtures and appliances, as they reach the end of their useful life or due to remodeling, with new, more efficient ones;<\/li>\n
  2. Outdoor demand reflects changing tastes and preferences and shifting socio-demographics, which has resulted in wholesale removal of irrigated turf and installation of more drought-tolerant landscaping;<\/li>\n
  3. New homes have more water-efficient fixtures and appliances than the existing housing stock, and are far less likely to have irrigated turf or swimming pools;<\/li>\n
  4. Federal voluntary standards like WaterSense and Energy Star have driven manufacturers to produce more efficient appliances and fixtures. California, Texas, and Colorado have made these standards mandatory, affecting what is sold in big box stores across the West;<\/li>\n
  5. Local conservation efforts, including education, rebates, and ordinances have created markets for, and hastened the acceptance of, highly water-efficient devices and landscapes.<\/li>\n<\/ol>\n

    These factors driving down municipal water demand are forecast to continue.\u00a0 All this increased water use efficiency sounds like good news for a semi-arid state like Arizona.\u00a0 And overall, it is.\u00a0 But there can be unintended consequences, particularly if reductions in demand are not anticipated or planned for.\u00a0 These include:<\/p>\n

    Fiscal Consequences<\/p>\n