To peak charge or flat charge for water?
There is an interesting discussion going at the moment between Sydney Water and the NSW pricing regulator IPART about varying water prices based on dam levels. https://www.smh.com.au/national/nsw/watchdog-recommends-water-prices-to-rise-and-fall-with-dam-levels-20200324-p54dbx.html
Basically, they are saying reduce fixed component from $700 to $540/yr. Then charge $2.30/kL (instead of $2.11) while dam levels are >60%, and $3.12/kL when <60%.
Personally, I have my doubts that this is the best option. Based on what I have seen, arrangements that really work in flattening the curve, yes, just like at the moment, are really draconian measures. Here, you could look at charging say $10/kL for "discretionary" use, such as excessive outdoor use (which we know is the most "elastic" demand, ie easy to reduce when needed) or even way too much indoor use.
I feel applying more modern technology would give us a far more granular, distinguished and more justly distributed response.
Smart water metering readily allows us to identify such usage patterns including water wasted due to leakage - both at the customer side, and within the network.
Would that not be a more contemporary solution than what seems to me a more old fashioned blunt approach based on two pricing tiers?
Again, if the current Coronavirus crisis shows us something then that those who combine modern technology with sophisticated data analysis do the best.
Should water utilities apply the same thinking and embrace e.g. collection and analysis of good customer usage information and data based on smart metering?
What do you think?
Experienced Water and Wastewater Planner
4 年I've never been a fan of using pricing signals that don't relate to the cost of service provision to achieve policy objectives. It is like congestion charging on roads. The price isn't enough to affect behaviour of wealthy people but it does affect lower income people and there is no relationship between cost of service provision and cost of usage. In this instance, there are fixed costs associated with operating a water network and the method of determing fixed costs isn't that hard and should include appropriate long term allowances for providing drought resilience so that we aren't in the current situation with billions of dollars of infrastructure on the cards that wasn't in the long term price path. There are also variable costs and these are unrelated to drought. But if you introduce congestion charging (ie time based tariffs) again you are probably most likely impact lower paid people who will be coming home from work, washing their family and preparing dinner at peak times whilst the wealthier in society how pour water all over their manicured lawns probably an expensive wifi controlled irrigation system in their garden that turns the water on in low tariff times. Fixed usage charges based on service size or similar appropriate parameters (perhaps this could vary by annual water consumption) and an inclining block tariff. I have never been swayed by arguments away from the conventional approach.
Circular Economy | Leadership for Better World | Project Portfolio Management Executive |Program Director | Change Management | Major Infrastructure Delivery | Water Professional | Engineering Executive |
4 年Guenter Hauber-Davidson, this is what general public were concerned about when we were installing smart water metres four or five years ago in one of the council areas within regional Queensland. The same concern was resonated at many urban areas as was reported in the main media ( TV and news papers). The concern was like Electricity metres for T1, T2 and T3. Though there is lot of technical arguments about water should be charged at higher rate at peak times, my professional opinion is stick to slab arrangement and define the slabs and each slab different KL rate. Higher the total consumption, higher slab fee, similar to Australian Tax rate with zero tax slab removed.
Circular Economy Facilitator & Water Futurist
4 年You make an excellent point about applying pricing approach to reduce peak demand would work best at the demand that is most "elastic" and that largely contributes to the peak.."discretionary" outdoor water use. Ah well... trust a 100+ year old monopoly to not be old fashioned?