News Feature | July 30, 2014

Can Utilities Make Friends With Conservation?

Sara Jerome

By Sara Jerome,

The downside of water conservation is that it hurts water utilities, which are already struggling to stay afloat.

"The need for more reliable revenue is more important than ever, as water service providers contend with prolonged droughts and aging infrastructure. Unfortunately, this need for revenue can make conservation the unwanted stepchild of water utilities," according to an editorial published by National Geographic

Does it have to be that way? Maybe not.

"The good news is that there are more tools than ever to help water systems anticipate the potential volatility of future revenues. The Environmental Finance Center at University of North Carolina Chapel Hill developed one such tool, available for free," the commentary said. 

The tool helps utilities predict their revenue when different variables change. "[It] allows utilities to quickly determine the proportion of residential revenues from water sales at risk of loss when demand patterns change, based on the utility's own rate structure, customer demand profile, and weather conditions," the Water Research Foundation said

Predicting revenue can be tricky for utilities, according to the report "Measuring and Mitigating Water Revenue Variability" by Ceres and UNC EFC. "If customers at all three utilities cut their water use by 15 percent, the resulting change in water revenue is by no means uniform. The Southeastern Coastal Utility fares fairly well, with only a seven percent reduction in revenue. The Mountain Resort Utility, on the other hand, would see a whopping 24 percent reduction in revenue," the National Geographic editorial said. 

Even without the conservation issue, utilities are having a tough time breaking even. Between regulatory compliance, aging infrastructure, and reduced revenue due to conservation, "you have a cesspool of financial worries," the Kansas City Star reported, citing a new research paper by the consulting firm Black & Veatch. 

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