Finding a better formula for for rate (%) for water conservation

[epemix@att.net]

I am an adult trying to advocate change to the formula that is used by the state office which regulates
Apartment Sub-Metered Water & Wastewater billing. The formula is counterintuitive due to the droughts
across the country. It does not promote conservation of water & it is imperative that I try to change it.
However, I am not that great at math & need some help with this problem. I understand the following
calculation but it does not make sense the way it is set up. Steps 1 & 2 & both a & b are the areas
in which I need help.

You will see that the higher the water consumption, the lower the rate for water/wastewater (September);
conversely, less water consumption produces a higher rate (October), which is punitive to the consumer
who tries to conserve water. Therein lies the problem, as it goes against water conservation efforts. My
question is this: What formula would give a fair & equitable rate for both the utility and the consumer,
while rewarding the conservation of water? Can someone help me with this problem?

CURRENT FORMULA FOR FINDING RATE TO CHARGE FOR SUB-METERED WATER & WASTEWATER

(Step 1) water utility service: the retail public utility's a) total monthly charges for water service
($2064.), b) divided by the total monthly water consumption (166.5 or 166,500 gals) measured by the retail public utility to obtain an average water cost per gallon or percentage rate, c) multiplied by the tenant's monthly consumption (215 10 gal units or 2,150 gals);

(Step 2) wastewater utility service: the retail public utility's a) total monthly charges for wastewater service ($2064.), b) divided by the total monthly water consumption (166.5 or 166,500 gals) measured by the retail public utility, c) multiplied by the tenant's monthly water consumption (215 10 gal units or 2,150 gals)

Examples:

October Total Wastewater Charges: $2064.

October Total Wastewater Charges: $2064.

$4128./166.5 = 0.24792792 (Rate) x 215 (10 gal units) = $53.304502

********************************************************************************************
Previous Month:

September Total Water Charges: $2064.

September Total Wastewater Charges: $2064.

$4128./453.6 = 0.091005291 (Rate) x 229 (10 gal units) = $20.84019

Thanks so much for any help given.

epemix

 

[Ishuda]

Just my opinion: The actual rates are going to be a political and practical compromise. In addition, from that standpoint, there will need to be a average rate decrease for large water use in some practical sense. You can not raise the water bills of the big users to the extent that you drive them away and lose jobs and city income. But you can raise all rates slightly for more than 'normal' consumption to encourage conservation of water.

The problem becomes determining what is normal. Certainly, in one sense, you can not go by what has been used in the past since a conservative conscious 'person' [billing entity] has already been using less (and maybe much less) than the person who is not conservative conscious. For a rather extreme example think of a person who has planted water hungry plants (including on their additional residential lot) and doesn't use their gray water for watering as opposed to one who has a single residential lot, planted water conserving plants and uses their gray water for watering.

If one could determine a 'normal' for a 'person' you could use the same fee structure you have now for up to x% above normal usage and some graduated 'penalty rate' for over that. Depending on just how bad the situation was, x could even be negative. Certainly, at worse, the new structure should be revenue neutral. If it were revenue positive, the additional could be used to fund a 'water conservation awareness office'.

 

[Ishuda]

...Curious: why not simply $4128, instead of $2064 twice?
Each seem to be exactly same...

Seems like one is called out as an actual 'amount of water used' charge and the other is what is called in some places, a 'sewer system services charge' or sewer charge. Some municipalities have different rates for these services. The sewer charge is based a lot of the times on the estimate of what goes in goes out. In fact, that charge probably shouldn't change and continue to be based on actual water use.

 

[epemix@att.net]

Just my opinion: The actual rates are going to be a political and practical compromise. In addition, from that standpoint, there will need to be a average rate decrease for large water use in some practical sense. You can not raise the water bills of the big users to the extent that you drive them away and lose jobs and city income. But you can raise all rates slightly for more than 'normal' consumption to encourage conservation of water.

The problem becomes determining what is normal. Certainly, in one sense, you can not go by what has been used in the past since a conservative conscious 'person' [billing entity] has already been using less (and maybe much less) than the person who is not conservative conscious. For a rather extreme example think of a person who has planted water hungry plants (including on their additional residential lot) and doesn't use their gray water for watering as opposed to one who has a single residential lot, planted water conserving plants and uses their gray water for watering.

If one could determine a 'normal' for a 'person' you could use the same fee structure you have now for up to x% above normal usage and some graduated 'penalty rate' for over that. Depending on just how bad the situation was, x could even be negative. Certainly, at worse, the new structure should be revenue neutral. If it were revenue positive, the additional could be used to fund a 'water conservation awareness office'.

Thank you very much for your answer. I am not sure I fully understand what you are saying. Could you give me example of what you mean? Thanks

 

[epemix@att.net]

Your stuff sure ain't easy to read. The above seems to mean this:
a) total monthly charges for water service ($2064)
b) divided by the total monthly water consumption (166.5)
c) multiplied by the tenant's monthly consumption (215)

WHAT is the 166.5? Some established standard?

And the $2064 is an "across-the-board basis" used to perform calculations,
as per the Wisdom of some uninterested Board o' Directors: correct?

Curious: why not simply $4128, instead of $2064 twice?
Each seem to be exactly same...

Yes, you are correct about a), b) & c). The 166.5 is 166,500 gals or 1000ths of gallons of water. I used the decimal due to that is how the utility bills it to the apartment complex. No, it is not a standard. The previous month the gals used was 453.6 or 453,600 gallons, however, the amount charged by the utility to the complex was still $2064 for water & $2064 for wastewater. You are correct about the $4128, however, the billing company (not the utility which bills the apartment complex, but the billing company that bills the residents individually for their sub-metered water/wastewater) just uses the one $2064 for water for the purpose of calculation & then bills the same for the wasterwater due to what goes in - comes out, therefore the same charge. I do not know why the calculation doesn't use the total charge, because you are correct saying it comes out the same - it's just the way the billing company does it, I guess so they can show each charge on the bill individually, i.e., the resultant rate (0.123964 x 215-10 gal units = $26.65 for water & $26.65 for wastewater = totaling $53.30)

As for the $2064 & why it is used & is the same every month, per the utility company accounting head, is that when the apartment complex first set up their account, it was agreed upon to use that figure per water & that figure per wasterwater (which is 129 units in complex x $16 base rate per unit = $2064) for charging the complex plus some additional fees which is not passed along to the residents.

I hope I have answered all of your questions. Please let me know if it is clear and if you have any suggestions. Thanks so much. Oh & sorry it has taken me so long to answer these post.

 

[epemix@att.net]

Seems like one is called out as an actual 'amount of water used' charge and the other is what is called in some places, a 'sewer system services charge' or sewer charge. Some municipalities have different rates for these services. The sewer charge is based a lot of the times on the estimate of what goes in goes out. In fact, that charge probably shouldn't change and continue to be based on actual water use.

You are correct that the charges are for "water" & "sewer or wastewater, as they call it". The rates are different by the utility, however, due to the way the account for the apartment complex was set up, the utility shows a different amount for wastewater than the water but that amount of wastewater is included with the water amount so it is counted, but I do not understand why the utility shows it differently than the amount of gallons of water; however, the billing company that bills the residents, uses the same dollar amount charged for water & wastewater ($2064). Therefore, $2064 / 166.5 1000ths or 166,500 gallons = 0.123964 rate x 215-10 gal sub-metered units = $26.65 x 2 (1. water & 2. wastewater) = $53.30 - the amount the resident pays. This is just how the utility & billing company do it & I do not know why other than it is the way the owner set it up. The owner is not accessable, just the management company & they do not really know why either. So, unfortunately, I cannot answer some of the questions asked.

Also, FYI, the $2064 stays the same each month due to 129 units x $16 base rate = $2064. This is the way the owner set the apartment complex's account with the utility. However, the amount of gallons change each month, i.e., the previous month, the gallons used by the 129 units was 453.6 divided into $2064 = 0.0455026 x 229-10 gal units - resident's sub-metered usage = $10.42 x 2 (1.water & 2.waste-water) = $20.84 - what the resident had to pay. You can see here by the examples for both months that the rate increases / decreases per the amount of total gallons for the entire 129 units, 123964/0.0455026
respectively.

I am sorry for the time lapse in anwering your questions. Please forgive me & hopefully, you will be able to help. Thanks

 

[Ishuda]

Thank you very much for your answer. I am not sure I fully understand what you are saying. Could you give me example of what you mean? Thanks

O.K. However, the actual charge to the resident is a different kettle of fish that the charge by the state office. The state office does not care how many apartments are rented and charged for water. The tenants do. Suppose the average use was about 2000 gals per tenant and the apartment complex had 85 tenants Oct but the full 129 in Sep. The use is about right for Oct but over average by quite a bit (~1500 gal/tenant average) in Sep.

In either case, you will need a database of 'billed entity' vrs. 'amount allowed'. As I mentioned before, this is generally the holdup/stopper to plans for rate changes like this. You need to be as fair as you can in the charges. Lets take the two examples you have. It appears, as I understand the bills, that the water (and waste water) charge from the state to the apartment complex is fixed regardless of use. It also appears the charge from the apartment complex (through a billing company) to the tenants are charged on a usage basis.

The thing that needs to be changed is the flat rate the apartment complex is charged for your plan to have any affect. Right now I need to go but I'll be back later if I can with an example.

 

[epemix@att.net]

It sounds like it would be difficult to change the rate due to the reasons you point out.
I will look forward to your example(s).

Thanks

 

[stapel]

It sounds like it would be difficult to change the rate due to the reasons you point out.
I will look forward to your example(s).

Does the exercise on which you're working expect you to create examples? (Are you writing a paper of some sort?) If so, then we'll be glad to review your examples. Please be complete. Thank you!

 

[Ishuda]

It sounds like it would be difficult to change the rate due to the reasons you point out.
I will look forward to your example(s).

Thanks

Sorry, I thought I had done this before. Must not have posted it. This is an example of the charge by the water utility service to the apartment complex and nothing to do with the apartment complex charge to the tenants. In this example, that remains the same process. It is assumed that the data base mentioned above shows an average usage of 2200 gallons per month per apartment and that a fair charge would be a surcharge of $5.00 per 1000 gallons. Those numbers would change depending on what was found in the investigation process. Because of the extra expenses and burden on both the water utility service and the apartment complex which would be incurred in tracking apartment occupancy rates, charges will be on a number of apartments basic rather than a number of apartments rented during the period. Thus
Water Utility Service charges for Apartment complexes:
(1) Water Usage: Each apartment complex shall be charged a flat rate of $16.00 per month for each apartment in the complex for the first 2200 gallons of average use in the billing period. For water use of more than an average of 2200 gallons per apartment, a surcharge of $5.00 per 1000 gallons will be charged.
(2) Wastewater Usage: Waste water charge shall be a flat $16 per apartment in the apartment complex.


Examples:

October Total Wastewater Charges: $2064.00

October Total Water Charges: Total $2064.00
...Actual use 166.5K gals
...Flat rate charge for up to 283.8K gals ...$2064.00
...Surcharge for excess usage $0.0
$4128./166.5 = 0.24792792 (Rate) x 215 (10 gal units) = $53.304502

************************************************** ******************************************
Previous Month:

September Total WasteWater Charges: $2064.00

September Total Water Charges: Total $2913.00
...Actual use 453.6.5K gals
...Flat rate charge for up to 283.8K gals ...$2064
...Surcharge for excess usage 169.8 K gals @ $1.00 ...$849.00

$4977./453.6 = 0.1097222 (Rate) x 229 (10 gal units) = $25.12639


Of course this kind of thing couldn't be applied just to apartment complexes. It would need to be applied to single owner homes and other businesses.

Edit to add: Note also that this would be a (possibly very) big increase in Water Utility Service charges. Possibly a decrease in the flat rate charge could be made to make the change 'cost neutral'.