Karen Guz Director / Conservation Conservation Conundrum; Saving Water & Collecting Revenue January, 2015 Customer Profiles by Program

January, 2015 Conservation Conundrum Page 2 Conservation = Lower Long-Term Rates Water rates reduced by avoided new supplies

January, 2015 Conservation Conundrum Page 3 Conservation = Lower Long Term Rates Sewer capacity is extremely expensive

January, 2015 Conservation Conundrum Page 4 Good News: Conservation Works! 8% Municipal water use reduction across Texas in ten years

January, 2015 Conservation Conundrum Page 5 Bad News: Price of Water Will Go Up

January, 2015 Conservation Conundrum Page 6 Downward Use: What’s Going On? Many reasons point to continued reduction in water use Water use will continue to decline everywhere. It will decline faster with active water conservation programs.

January, 2015 Conservation Conundrum Page 7 Why Will Water Cost More? Fixed Costs Going Up; labor, material, fuel New Water Supplies Expensive Aging Sewer Infrastructure Costs Aging Water Infrastructure Maintenance Water quality and environmental expectations Nothing is getting cheaper over time

January, 2015 Conservation Conundrum Page 8 Revenue Average 80% of revenue from variable rates; change with weather Production Forecasting is NOT easy – Weather..rain and temperature – Economy – Growth – Changing customer habits – New technology – Drought Costs 80% of costs fixed; will not change as consumption drops During drought costs can INCREASE as sales decline Variable costs like fuel can be problematic Revenue Stability Challenge

January, 2015 Page 9 Conservation Conundrum A Unique Business Challenge Wet years = no peak sales Dry years = excessive peak sales

January, 2015 Conservation Conundrum Page 10 Tiered inclining block rates Water Budget Rates Peaking capacity charge Higher First Block Rate Drought Surcharge Lifeline Rate Use more then pay more Need estimated per site High summer users pay More fixed charges Excess use drought rate Low Income Needs Options Come Down to Politics Which technical rate option works for your community?

January, 2015 Conservation Conundrum Page 11 Averages NOT Helpful Residential Average Water Use 2013 – Summer :8,500 – Winter:6,700 Residential Top 1% Water Use 2013 – Summer:32,000 Current Billing Tiers – 0 to 5,985 – 5,986 to 12,717 – 12,718 to 17,205 – 17,206 + June-August 2013 Bills San Antonio Water Use Profiles 83% of customers used under 12,718 gallons/month during the hottest months

January, 2015 Conservation Conundrum Page 12 Rate Approval = Community Process Water costs are going up Conservation mitigates but does NOT eliminate increases Rates Advisory Committees of customers Public Outreach Constant Conversation We all need to talk water reality MORE with EVERYONE Process Steps Needed

January, 2015 Conservation Conundrum Page 13 Free Water Rate Resources Informative videos White papers Case studies Demand Forecast Model Resource Library Rates Workshops Case Studies Rates Analysis Resources

January, 2015 Conservation Conundrum Page 14 Questions? More Information? Karen Guz SAWS Web Resources GardenstyleSA.com

Karen Guz Director / Conservation Conservation Conundrum; Saving Water & Collecting Revenue January, 2015 Customer Profiles by Program