The Theory of Water and Utility Pricing - Global Drinking Water Management and Conservation - page 97

Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Wis-
consin. In particular, 10 top water systems (based on the service population) in each
state are included in the survey. The major

findings are summarized below (Beecher

and Kalmbach 2013 ):

(a) Water charges are considerably lower for municipal water systems and higher
for private water systems (Table 5.6 ). Comparatively higher charges for pri-
vately owned systems are associated in part with income taxes and the cost of
equity, but possibly with higher territorial service costs as well as various
costing and ratemaking practices. In addition, other revenue sources of
municipal water systems such as low-cost debt financing or government grants

and transfers could be another explanation. Compared to municipal water
systems, the private systems always impose fixed charges to cover the cost of

fire protection and other service costs. Furthermore, the scale economies are
not apparent, especially for private water systems; in fact diseconomies
associated with distribution-related costs and other costs have been a concern
for both municipal and private water systems.
(b) Some 76 percent of the water systems primarily rely on surface water, which
imposes higher water charges compared to the systems relying on ground-
water, mainly because higher costs are associated with meeting surface water
treatment requirements set by the USEPA.
(c) The decreasing-block rates are more common for nonresidential consumers,
while increasing-block rates are more often used for residential consumers (see
Table 5.7 ).

(d) ciency, most water systems provide conservation

information and tips to the customers they serve. In addition, some water
systems take fairness and ability to pay into account through discounts for
low-income households and seniors (Table 5.8 ).
(e) The

In order to improve water ef

fixed charge in water prices varies by the quantity of water supplied and in
particular the lower fixed charge is always for higher-volume water usage (see

Fig. 5.6 ).

Table 5.6 Average charges for monthly water usage (Beecher and Kalmbach 2013 )
Water
systems

Residential Commercial Industrial

Meter size 5/8 ″ 5/8 ″ 5/8 ″ 5/8 ″ 2 ″ 4 ″ 8 ”

Water
consumption

0 cf 500 cf 100 cf 3000 cf 50,000 cf 1,000,000

cf

2,000,000
cf

Municipal
(56)

$6.29 $14.58 $24.96 $65.40 $966.00 $17,087.00 $33,773.00

Private
( 5.13 )

$14.66 $34.71 $55.13 $128.93 $1,613.00 $25,171.00 $47,849.00

Surface
water (61)

$8.00 $19.33 $32.50 $84.04 $1,192.00 $20,342.00 $39,784.00

Groundwater
( 5.19 )

$7.71 $16.21 $26.86 $63.73 $860.00 $14,626.00 $28,842.00

Note cf stands for cubic feet