ALAN PLUMMER ASSOCIATES, INC. Evaluation of Peak-Day Water Conservation Strategies for the City of Austin:

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1 DRAFT TECHNICAL MEMORANDUM ALAN PLUMMER ASSOCIATES, INC. Evaluation of Peak-Day Water Conservation Strategies for the City of Austin: PROJECT: DATE: July 12, 2006 PREPARED FOR: City of Austin Water Conservation Division PREPARED BY: Brian K. McDonald, Texas P.E Alan Plummer Associates, Inc. (APAI) Stephen J. Coonan, Texas P.E Alan Plummer Associates, Inc. (APAI) 1.0 INTRODUCTION Water demand and water treatment plant capacity projections for the City of Austin indicate that the City will have to place a fourth water treatment plant into service within the next seven years. With a goal of deferring the need for this plant, the City is evaluating the potential for additional peak-day water conservation in the next five years. In support of this effort, Alan Plummer Associates, Inc. (APAI) has identified and evaluated 12 water conservation strategies that have the potential for significant peak-day water savings in the next five years. This technical memorandum describes the selection of peak-day water conservation strategies for evaluation, describes each selected strategy, and discusses the potential water savings, reliability, implementation schedule, and opinion of probable cost for each selected strategy. A table of contents is shown in Table 1.1. Table 1.1: Table of Contents Item Memorandum Section Selection of peak day water conservation strategies 2.0 Enhanced water waste ordinance 3.0 Conservation water pricing and rate structure changes 4.0 Large property irrigation systems analysis 5.0 Single-family irrigation system audits 6.0 Pressure control 7.0 Turfgrass rebates 8.0 Single-family retrofit on resale ordinance 9.0 Federal clothes washer standards 10.0 Multi-family submetering ordinance 11.0 Efficient pre-rinse spray valves 12.0 Single-family winter leak detection 13.0 Enhanced leak detection and repair 14.0 Summary 15.0 References 16.0 In the second phase of this project, APAI will perform a more comprehensive evaluation of water conservation strategies with a goal of reducing average day demand into the future. 1 of 61

2 2.0 SELECTION OF PEAK-DAY WATER CONSERVATION STRATEGIES Table 2.1 presents 161 potentially feasible water conservation strategies compiled from recommendations of the statewide Water Conservation Implementation Task Force 1, from strategies that have been implemented by other cities or agencies a, and from strategies that were proposed in Austin s Water Conservation Plan 2. Beginning with this initial list, strategies were selected for further evaluation. Selected strategies must impact peak-day water use and must have the potential to conserve a significant amount of water in the next five years. (Reuse strategies are being evaluated as part of a different project task). Identification of strategies that result in a significant amount of water savings is somewhat subjective and was based on APAI experience. Some methods were not considered for this initial phase of work because the relatively high unit cost will likely limit implementation and water savings. Other strategies were not selected for this initial phase because it is anticipated that it will take more than five years to develop significant water savings. All strategies not considered for this initial phase will be included in the second phase of evaluation to determine whether they can contribute to the long term goal of reducing total water consumption. Table 2.1: Potentially Feasible Water Conservation Strategies Additional FTE, professional marketing staff, for ICI program Advertisements/program marketing Aggressive, sustained public education program; perhaps contract with professional PR firm Alternative water sources Athletic fields, parks, golf course programs Automatic meter reading (AMR) meters that detect continuous flow (SNWA/LVVWD) Block leader program Car wash certification Central cooling plant incentives and/or requirements City-wide water efficiency Clothes washer rebate Collecting fuel cell vapor Comprehensive landscape ordinance (X% native plants, Y% max turf, Z soil depth, etc.) Conservation awards Conservation block rates or peak rates Conservation coordinator Conservation kits, including shower heads and aerators Conservation ordinance - Annual irrigation system analyses for large properties Conservation ordinance - Car wash fundraisers at commercial facilities only Conservation ordinance - Car wash restrictions Conservation ordinance - Collection of AC condensate Conservation ordinance - Commercial power washer registration Conservation ordinance - Cooling tower minimum cycles; new towers have conductivity controllers, make-up and blowdown meters Conservation ordinance - Minimum irrigation areas and flow direction on new systems Conservation ordinance - Positive shutoffs on spray rinse wands, flow restrictors for garbage disposals Conservation ordinance - Prohibit once-through cooling equipment Conservation ordinance - Prohibit once-through cooling ice machines Conservation ordinance - Rain shutoff device requirements Conservation ordinance - Soil depth ordinance a The City surveyed the following cities and/or agencies: Dallas, El Paso, San Antonio, Tampa, East Bay Municipal Utility District (California), Southern Nevada Water Authority/Las Vegas Valley Water District, and Seattle. 2 of 61

3 Table 2.1 Continued: Potentially Feasible Water Conservation Strategies Conservation ordinance - Turfgrass dormancy capability required Conservation ordinance - Xeriscape option from homebuilders Conservation ordinance - Xeriscape option on model homes required Conservation ordinance - Zonal irrigation system required Conservation Potential Assessment using computer modeling (e.g., Seattle) Conservation rate structure changes; add another tier on top end or water budgeting combination Cooling tower audits Cooling tower certification program Decentralized water/wastewater reuse plants Dedicated irrigation meters required for new accounts Drip irrigation incentives Electronic newsletter Energy and water conservation Enhanced education-in-schools program Enhanced leak detection/repair program Enhanced metering program Enhanced reuse program Enhanced water waste ordinance; bump Stage 2 elements to Stage 1 ET controller rebate ET controllers and bi-annual system audits for existing irrigation systems ET watering program Evaporative AC replacement rebates Full or greater rebates for toilet installation; performance contractor possibility Graywater recycling incentives and/or requirements for new construction Graywater recycling incentives for existing homes HOA rules - prohibit restrictive covenants that prevent conservation in landscaping and irrigation systems/practices Hot water on demand rebates Ice machine rebate ICI newsletter Increase water rates Industrial boiler and steam systems Industrial refrigeration Industrial system audits and surveys Industrial water treatment Institute conservation rate structures, practices, programs with wholesale customers upon contract renewal Irrigation meters required for commercial over 10,000 sq ft. Irrigation system audits Irrigation system permits; w/ system requirements per HB2914 Irrigation system rebates Landscape rebates Leak detection kits Leak detection/repair program for low-income Local/state clothes washer standards Management and employee programs Metering of all new connections and retrofit of existing connections Multi-tiered rebates to promote clothes washers that achieve efficiency levels beyond 2007 federal standards Parkway strips - remove TCM requirement or prohibit all but drip irrigation Peak day management campaign Perform on-site indoor audits while doing irrigation audits Performance contracting for wider deployment of rebate/incentive programs Pool cover incentives or requirements Pressure control Professional irrigators' training course Promotional program (free car) Rain barrel rebates and distribution 3 of 61

4 Table 2.1 Continued: Potentially Feasible Water Conservation Strategies Rain shutoff device distribution/incentives Rainwater harvesting demonstration projects Rainwater harvesting incentives for new construction Rainwater harvesting system rebates Raw water pump station Re-evaluate trigger policy Remote control auto-irrigation controller incentives Require indoor self-audits, provide free fixtures Require irrigation meter and submetered common areas and no allocated billing on this water (for MF that are allowed allocated billing) Require reclaimed water (if available) for cooling towers, irrigation, central cooling plants Restaurant certification (spray valves and toilets) Retrofit on resale or by 2010 Reuse of process water Rinsing/cleaning School education programs Send conservation kits, including shower heads and aerators when residents return indoor/outdoor self surveys Showerhead, aerator distribution Soil depth initiative Soil sensor incentives or requirements Special commercial rebates Spray valve replacement Submetered billing incentives or requirements Swimming pool filter rebates Swimming pool maintenance Swimming pool program Swimming pool retrofit Targeted low-income conservation program Toilet flapper retrofit Toilet leak detection kits - wide distribution Toilet replacement/rebate Turf removal incentives Two-tiered rebates to promote HETs and/or dual-flush over ULFTs Use pressure zone analyses to ID areas to focus on for customer assistance (EBMUD) Videos and other publications Water efficiency SOPs, checklist and reporting for all city departments Water reuse Water system audit and water loss reduction Water waste ordinance - 50-ft runoff Water waste ordinance - Athletic field, golf course restrictions Water waste ordinance - Broken/misadjusted irrigation components Water waste ordinance - Cannot use swimming pool fill valves Water waste ordinance - Fountain restrictions Water waste ordinance - Hand water at night on designated days only Water waste ordinance - Hotels reduce laundry Water waste ordinance - Hydrant and sewer flushing on emergency basis only Water waste ordinance - Irrigation system watering every other week Water waste ordinance - No construction watering unless reclaimed water Water waste ordinance - No daytime watering with irrigation system Water waste ordinance - No hand watering on restricted days Water waste ordinance - No irrigation system watering Water waste ordinance - No misters Water waste ordinance - No new connections (with some exceptions) Water waste ordinance - No new landscapes Water waste ordinance - No pavement washing 4 of 61

5 Table 2.1 Continued: Potentially Feasible Water Conservation Strategies Water waste ordinance - No pool filling Water waste ordinance - No unattended hoses Water waste ordinance - No vehicle washing Water waste ordinance - Nursery water restrictions Water waste ordinance - Ordinance variances suspended Water waste ordinance - Ponding hard surfaces Water waste ordinance - Restaurant water on request only Water waste ordinance - Restricted foundation watering Water waste ordinance - Restricted watering days (1/5) Water waste ordinance - Unrepaired leaks Water waste ordinance - Vehicle washing by hand only Water waste ordinance - Vehicle washing restrictions Water waste ordinance - Voluntary watering days (1/5) Water waste ordinance - Water for power production voluntarily reduced Water waste ordinance - Wholesale customers encouraged to comply Water waste ordinance - Wholesale customers encouraged to reduce leaks, stabilize pressure Waterwise Hotel/Motel Program Waterwise Restaurant Program - enhanced deployment Web page Wholesale agency assistance programs Winter leak detection program Workshops, presentations, outreach Xeriscape and rainwater harvesting home tour The following peak day water conservation strategies were selected for further evaluation in this phase: Outdoor measures: o Enhanced water waste ordinance (transfer certain Stage 2 elements to Stage 1) o Conservation water pricing and rate structure changes (tiers, peak rates, water budgeting) o Large property irrigation systems analysis o Single-family irrigation system audits o Pressure control o Turfgrass rebates Indoor measures: o Single-family retrofit on resale/multi-family and ICI retrofit by date ordinance o Federal clothes washer standards o Multi-family submetering ordinance o Efficient pre-rinse spray valves o Single-family winter leak detection Other measures: o Enhanced leak detection and repair Table 2.2 shows water use types and water users that would be most impacted by these strategies. Each strategy is discussed in detail in the next sections. 5 of 61

6 Table 2.2: Water Uses and Water Users Most Impacted by Selected Peak-Day Water Conservation Strategies Strategy Water Uses Water Users General Indoor Outdoor ICI* Single-Family Multi-Family Public Utility Enhanced water waste ordinance X X X X X X Conservation water pricing and rate structure changes X X X X X X Large property irrigation systems analysis X X X X Single-family irrigation system audits X X Pressure control X X X Turfgrass rebates X X X X X Single-family retrofit on resale ordinance X X X X Federal clothes washer standards X X Multi-family submetering ordinance X X Efficient pre-rinse spray valves X X Single-family winter leak detection X X X Enhanced leak detection and repair X X *ICI is Industrial, Commercial, and Institutional. 6 of 61

7 3.0 ENHANCED WATER WASTE ORDINANCE 3.1 Description Title 6, Article 2 of the Austin City Code establishes a water use management plan. The water use management plan consists of permanent water use restrictions, Stage 1 regulations, Stage 2 regulations, Stage 3 regulations, and additional restrictions during long-term water supply shortages. Under the permanent water use restrictions, a person must repair controllable leaks, properly repair and adjust permanently installed irrigation systems, and prevent irrigation runoff and ponding. Stage 1 regulations are effective from May 1 through September 30 and at other times determined by the director of the Austin Water Utility. Stage 1 regulations ban outdoor irrigation with a permanently installed irrigation system between the hours of 10 a.m. and 7 p.m. However, the prohibition does not apply to a single family, duplex, triplex, or fourplex residence or to certain other situations. Residential customers are requested to follow the watering hours, and all water customers are requested to maintain a once-every-five-days watering schedule 10. Under Stage 2 regulations, a person may not irrigate outdoors, except with a hand-held hose or a hand-held bucket at any time; or with a hose-end sprinkler, a soaker hose, or drip irrigation, from 12:00 a.m. to 10:00 a.m. and from 7:00 p.m. to 12:00 a.m. on a designated outdoor water use day; or with a permanently installed automatic irrigation system from 12:00 a.m. to 10:00 a.m. on a designated outdoor water use day. Designated outdoor water use days are assigned on a once-every-five-days schedule. The Stage 2 regulations also include restrictions on washing of vehicles, foundation watering, use of fountains, golf course irrigation, and water service at restaurants. In addition, the Stage 2 regulations include a prohibition on using an automatic fill valve to add water to an outdoor pool or pond. Under Stage 3 regulations, a person may not irrigate outdoors, except with a hand-held hose or hand-held watering can from 6:00 a.m. to 10:00 a.m. and 7:00 p.m. to 10:00 p.m. on a designated outdoor water use day. The Stage 3 regulations also include additional restrictions on foundation watering and prohibition of vehicle washing; adding potable water to a swimming pool, wading pool, fountain, or pond; beginning a new landscape; and washing paved areas. Finally, during long-term water supply shortages, the city manager may prohibit use of potable water for outdoor watering and may require municipal wholesale customers to curtail water use on a pro rata basis. There are a number of minor exceptions and exemptions from the above regulations. Outdoor use of reclaimed water is largely exempted from these restrictions. Other exceptions are not discussed here in the interest of brevity. To enhance the existing water waste ordinance, the following Stage 2 regulations could be moved to Stage 1, where they would automatically take effect from May 1 through September 30: A person may not irrigate outdoors, except: o with a hand-held hose or a hand-held bucket at any time; or o with a hose-end sprinkler, a soaker hose, or drip irrigation, from 12:00 a.m. to 10:00 a.m. and from 7:00 p.m. to 12:00 a.m. on a designated outdoor water use day; or o with a permanently installed automatic irrigation system from 12:00 a.m. to 10:00 a.m. on a designated outdoor water use day. It is anticipated that designated outdoor water use days would be assigned on a once-every-five-days schedule. 7 of 61

8 Restrictions on vehicle washing, with exemption of certain commercial car washes: o A person may not wash a vehicle or mobile equipment, except on a designated outdoor water use day from 12:00 a.m. to 10:00 a.m. and from 7:00 p.m. to 12:00 a.m. o A person who washes a vehicle or mobile equipment must use a hand-held bucket or a hand-held hose equipped with a positive shutoff nozzle. A person may not water the ground around a foundation to prevent foundation cracking except on: o a designated outdoor water use day from 12:00 a.m. to 10:00 a.m. o the second day after the designated outdoor water use day from 12:00 a.m. to 10:00 a.m. using a soaker hose or drip system placed within 24 inches of the foundation that does not produce a spray of water above the ground. A person may not use an automatic fill valve to add water to an outdoor swimming, wading pool, or pond. A person may not wash a sidewalk, driveway, parking area, street, tennis court, patio, or other paved area, except to alleviate an immediate health or safety hazard. A restaurant may not serve water to a customer except when requested by the customer. The above regulations currently serve as reserve measures to allow the utility to quickly reduce water use during emergencies or severe droughts. If these regulations are moved to Stage 1 for all customers, the Utility will no longer have this flexibility when it is needed most. To achieve significant water savings but retain the ability for the Utility to quickly reduce water use during emergencies or severe droughts, the Utility could move the above regulations to Stage 1 for multi-family residential and ICI (MF/ICI) customers only. 3.2 Potential Water Savings On July 16, 2000, Austin implemented Stage 2 regulations and did not lift the Stage 2 regulations until September 22, a total of 69 days 10. Figure 3.1 (taken directly from reference 10) shows that water use quickly dropped from 220 million gallons per day (mgd) to approximately 185 mgd, rebounding slightly to approximately 193 mgd. Two rain events limited daily water use for the remainder of July. With the exception of days following two small rain events, daily water use gradually trended higher throughout August, reaching a peak of approximately 212 mgd in early September when a new all-time high temperature of 112ºF occurred. After this peak, temperatures moderated somewhat and several rain events occurred, reducing water use until the Stage 2 regulations were lifted September 22. During this implementation, daily water use was reduced by about 12.3 percent during the first week. However, a new peak water use was established (approximately 212 mgd) that was about 3.6 percent less than the peak water use prior to implementation of the Stage 2 regulations. In 2000, the annual average water use was mgd. Stage 2 regulations were implemented at 220 mgd, a factor of 1.6 times the annual average water use. There are two methods for estimating the potential annual water savings from an enhanced water waste ordinance applied to MF/ICI customers. The first method is to assume that the experience of summer 2000 will be repeated. The potential water savings are estimated based on the following assumptions: 8 of 61

9 Figure 3.1 Summer 2000 Stage 2 Water Use Restrictions Water Use (mgd) Temperature (deg F) TRACE 20 7/1 7/8 7/15 7/22 7/29 8/5 8/12 8/19 8/26 9/2 9/9 9/16 9/23 9/30 Date TRACE Rainfall (in) Beginning/End of Stage 2 Restrictions Water Use Stage 2 Trigger Temperature 9 of 61

10 Projected pumpage with water conservation from Austin s Water Conservation Plan 2, May-September average monthly usage is 1.11 times the annual average monthly usage for MF/ICI customers (as experienced from 2001 to 2004), Water savings from May-September will be 3.6 percent of the May-September usage for MF/ICI customers, and Peak day water use equals May-September water use for MF/ICI customers (this is conservative). The second method is to estimate the savings for an individual MF/ICI connection and project that amount to all MF/ICI connections. Under this method, the potential annual water savings are estimated based on the following assumptions: Savings of 4,000 gallons per summer month for an MF/ICI connection that irrigates frequently 2, Approximately 10.7 percent of connections are MF/ICI connections, Approximately 50 percent of MF/ICI connections have automatic irrigation systems, 95 percent participation, Peak day water use equals summer average water use for MF/ICI customers (this is conservative). Based on these estimation methods, Table 3.1 shows the potential reductions in water use from additional Stage 1 regulations. 3.3 Reliability It is perceived that the public was supportive of Stage 2 restrictions in the summer of 2000 because the restrictions were short-term and were caused by above-normal temperatures and below-normal rainfall 10. It is not clear that the public will be as supportive of a permanent mandatory five-day summer watering schedule (and other restrictions). Building support for, knowledge of, and widespread participation in this conservation measure will require a strong public education effort and consistent enforcement. In addition, the 3.6 percent savings achieved in the summer of 2000 was based on water used by all customers. It is not clear whether MF/ICI customers reduced water use by 3.6 percent during that period. Because of uncertainty in public support/participation and in the expected magnitude of the savings, the reliability of achieving the 3.6 percent savings experienced in the summer of 2000 is medium. The projected savings based on analysis of a five-day watering schedule for individual MF/ICI connections represent a savings of approximately 1.1 percent from peak day water use. This estimate should be a reliable lower bound on actual savings. 3.4 Implementation Additional Stage 1 restrictions could be implemented by the City Council in time for the summer of As discussed above, a strong public education effort will be required to build support for, knowledge of, and participation in this conservation measure. 10 of 61

11 Table 3.1: Potential Changes in Water Use from Additional Stage 1 Regulations on MF/ICI Customers (mgd) Type Peak Day (1.29)-(4.12) (1.31)-(4.21) (1.34)-(4.28) (1.36)-(4.36) (1.38)-(4.44) (1.41)-(4.54) (1.43)-(4.61) (1.46)-(4.69) (1.49)-(4.78) Annual (0.55)-(1.75) (0.56)-(1.79) (0.57)-(1.82) (0.58)-(1.85) (0.59)-(1.89) (0.60)-(1.93) (0.61)-(1.96) (0.62)-(1.99) (0.63)-(2.03) 11 of 61

12 3.5 Opinion of Probable Cost Assuming annual costs of $100,000 for public education in the first year, $50,000 for public education in subsequent years, and $1.00 per MF/ICI connection per year to enforce additional Stage 1 restrictions, the annual cost would be approximately $121,000 in 2007 and approximately $71,000 in 2008, with subsequent increases over time in direct proportion to the number of connections. The opinion of probable unit cost ranges from $0.19 to $0.61 per thousand gallons, depending on which estimate of savings is used. 12 of 61

13 4.0 CONSERVATION WATER PRICING AND RATE STRUCTURE CHANGES 4.1 Description As real b water rates increase, water consumption generally declines. Therefore, increases in real water price can result in water conservation. A water conservation pricing strategy may include increases in average water price and/or a rate structure that increases marginal prices with increased water consumption. Potential conservation rate structures include increasing block rates, base and excess usage rates, and seasonal rates. Studies of water pricing and water demand in Texas have found that customers focus on the total amount of their water bill and are generally unaware of the pricing structure 4,5,6. In other words, average price is more important than marginal price in explaining water demand. In addition, price sensitivity is greatest with respect to summer water usage (outdoor irrigation), 4,5,6 because summertime outdoor water use is not as essential as other water uses. The City s water rates (effective November 1, 2005) are shown in Table 4.1. The rate structure for retail customers includes a four-tiered increasing block rate for single-family customers. For retail multi-family residential, commercial, large industrial, and golf course customers, there is a single, flat rate that increases by 7 to 8 percent from July through October. Figure 4.1 shows a comparison of the City s retail rate for single-family residential customers with that of other cities in Texas and nationwide. For monthly use of 20,000 gallons or more, Austin s rates are the second highest behind Seattle s peak rates (in effect May 16 through September 15). For monthly use of 5,000 to 15,000 gallons, Austin s rates are lower than those for San Antonio, Houston, Seattle, and the East Bay Municipal Utility District (California). Austin s top tier rate of $6.42 per thousand gallons is the second highest top tier rate behind Seattle s peak rate of $11.43 per thousand gallons. Figures 4.2 and 4.3 show a comparison of the City s retail rates for multi-family residential and commercial customers with that of other cities in Texas and nationwide. Most of these cities do not differentiate between multi-family residential and commercial water use. Austin s rates are among the highest, trailing Seattle (peak rates), San Antonio, and El Paso at for high-use customers. The City could potentially conserve additional water through four changes in water rates: Increase real water prices for single-family residential customers and add a fifth tier to the rate structure. Create water budgets for multi-family and ICI (MF/ICI) customers. Implement an irrigation rate structure for MF/ICI customers. Changes to the wholesale rate structure. These items are discussed in more detail in Section 4.4 after discussion of the price and income elasticities of water demand. b Adjusted for inflation. 13 of 61

14 Meter Size Table 4.1: City of Austin Water Rates (Effective November 1, 2005) Monthly Charges Volume Charges: Retail Customers Volume Charges: Wholesale Customers Retail and Wholesale Customers Unit Cost per 1,000 Gallons Unit Cost per 1,000 Gallons Customer Account Charge Equivalent Meter Charge Total Customer Charge Inside City Outside City All Contract Volumes Expiration Date Single-Family 5/8" $2.90 $1.45 $ ,000 Gallons $0.86 $0.86 Anderson Mill MUD $2.29 6/9/2007 3/4" $2.90 $2.18 $5.08 2,000-9,000 Gallons $2.29 $2.29 Branch Creek Estates Water Supply Corp. $2.23 7/15/2016 1" $2.90 $3.19 $6.09 9,001-15,000 Gallons $3.70 $3.70 Creedmoor-Maha Water Supply Corp. $2.19 8/3/ /4" $2.90 $4.64 $ ,001 - over Gallons $6.42 $6.42 High Valley Water Supply Corp. $2.18 6/25/ /2" $2.90 $6.09 $8.99 Lost Creek MUD $2.61 7/7/2007 2" $2.90 $8.99 $11.89 Multifamily Manville Water Supply Corp. $2.89 1/24/2027 3" $2.90 $21.75 $24.65 Off Peak* $2.77 $2.91 Marsha Water Supply Corp. $2.27 4/3/2017 4" $2.90 $36.25 $39.15 Peak* $3.00 $3.15 Night Hawk Water Supply Corp. $ /23/2016 6" $2.90 $72.50 $75.40 North Austin MUD #1 $2.52 1/30/2024 8" $2.90 $ $ Commercial Northtown MUD $2.52 1/6/ " $2.90 $ $ Off Peak $3.38 $3.67 Pflugerville, City of $6.29 N/A 12" $2.90 $ $ Peak $3.62 $3.92 Rivercrest Water Supply $ /26/2031 Rollingwood, City of $2.71 2/3/2030 Large Volume / Industrial Shady Hollow MUD $ /7/2020 Off Peak $3.06 N/A Sunset Valley, City of $2.46 N/A Peak $3.29 Travis Co. WCID #10 $2.58 8/30/2020 Village of San Leanna $ /2/2014 Golf Courses Wells Branch MUD - N.A.G.C. $2.34 4/13/2021 Off Peak $3.38 $3.67 Windemere Utility Co. $4.12 4/12/2022 Peak $3.62 $3.92 Average Wholesale Rate $2.55 * Off Peak (November 1 through June 30 bills) Peak (July 1 through October 31 bills) 14 of 61

15 Figure 4.1: Comparison of Single-Family Residential Monthly Water Bills $300 Austin $250 San Antonio Monthly Water Bill $200 $150 $100 San Antonio (seasonal) El Paso Houston Dallas Seattle Seattle (seasonal) Tampa $50 EBMUD SNWA/ LVVWD $ Water Usage (1,000 gal) 15 of 61

16 Figure 4.2: Comparison of Multi-Family Residential Monthly Water Bills $3,000 Austin $2,500 Austin (peak) San Antonio $2,000 El Paso Monthly Water Bill $1,500 $1,000 $500 Houston Dallas Dallas (peak) Seattle Seattle (seasonal) EBMUD SNWA/ LVVWD $ Water Usage (1,000 gal) 16 of 61

17 Figure 4.3: Comparison of Commercial Monthly Water Bills $3,000 Austin $2,500 Austin (peak) San Antonio $2,000 El Paso Monthly Water Bill $1,500 $1,000 $500 Houston Dallas Dallas (peak) Seattle Seattle (seasonal) EBMUD SNWA/ LVVWD $ Water Usage (1,000 gal) 17 of 61

18 4.2 Price Elasticity of Water Demand Price elasticity of water demand is the change in water demand due to an increase in real water price. A price elasticity of indicates that a 1.00 percent increase in real water rates will cause a 0.20 percent decrease in water usage. Price elasticity of water demand is a function of time, water price, customer behavior, and economic conditions. As water price increases and non-essential uses are eliminated, water demand should become less elastic with respect to price. The Texas Water Development Board (TWDB) sponsored a 1991 study 7 of per capita water consumption in Texas. Price elasticities were estimated from regression analyses of 11 years of municipal water usage data, water pricing, income statistics, weather data, and conservation programs across 72 cities in 28 Metropolitan Statistical Areas (MSAs) in Texas. The estimated price elasticity of water demand for Austin was in summer and in winter. The TWDB also sponsored a 1999 study 4 of water price elasticity in single-family homes in Austin, Corpus Christi, and San Antonio. In Austin, water use data were gathered for 1,022 homes that fit 15 different customer profiles reflecting house age, property value, lot size, and house size. The overall price elasticity for single-family water demand in Austin was Note that the price elasticities from the 1991 study are based on municipal water usage (which includes single- and multi-family residential, commercial, and other water uses), while the price elasticity from the 1999 study is for single-family residential water usage only. In response to price increases, commercial and industrial customers usually reduce their water usage by a greater amount than residential users 6. This may help explain why the 1991 price elasticities derived from Austin municipal water demand were greater than those derived from single-family residential demand. In addition, Austin per capita water usage was greater during the period (covered by the 1991 study) than in period (covered by the 1999 study). As more water is conserved, it is expected that water demand will become less and less elastic with respect to price, because there is a certain amount of water usage that is necessary, regardless of price. Therefore, it is reasonable that the price elasticity of demand reported in the 1999 study (-0.17) is somewhat closer to zero than the price elasticities reported in the 1991 study ( in summer and in winter). There is mixed evidence about whether summer and winter (outdoor and indoor) water demands have different price elasticities. The 1999 study 4 found that outdoor water demands were more sensitive to price than indoor water demands. However, the 1991 study 7 found little difference between summer and winter price sensitivity in Austin. Austin switched from a flat rate, single-tier rate structure to an increasing block, four-tier rate structure during the 1999 study. The study found that the change to an increasing block rate structure did not reduce Austin s water use, probably because the average real water price decreased after the change in structure. 4.3 Income Elasticity of Water Demand Water demand also changes due to changes in real income. An income elasticity of 0.50 indicates that a 1.00 percent increase in real income will cause a 0.50 percent increase in water usage. Income elasticity of water demand is a function of time, water price, customer behavior, and economic conditions. As income decreases and non-essential water uses are eliminated, water demand should become less elastic with respect to income. The 1991 study of per capita water consumption in Texas 7 found that the income elasticity of water demand for Austin was This means that for every percent increase in real income, water usage will increase by percent. It is not clear how this income elasticity was derived, and the result seems to 18 of 61

19 contradict actual water use and income statistics. From 1980 through 1994 (prior to introduction of most of Austin s conservation programs), overall per capita water use declined from approximately 200 gallons per capita per day (gpcd) to approximately 170 gpcd, per capita income 8 increased from $9,743 per year to $23,811, and the consumer price index for U.S. urban consumers 9 rose from 77.8 to In other words, real income increased by approximately 1.65 percent per year, yet per capita water use decreased by approximately 1.08 percent per year. Although increases in real water price and other factors may have played a role in the decreasing water use, it appears unlikely that the actual income elasticity of demand from 1980 through 1994 was Since 1994, Austin has implemented a number of conservation programs, including public education. By reducing non-essential water use, these programs should make water demand less elastic with respect to income. In recent years, the general trend in per capita water use has been toward decreasing per capita water use, while real income has continued to increase. Therefore, it appears that any influence of increasing income is being held in check by conservation programs and other factors. Therefore no impact of increasing real income will be considered in the estimation of potential water savings in Section Proposed Strategies and Potential Water Savings Table 4.2 shows the estimated breakdown in 2003 water usage by user category. The single-family residential, commercial, and multi-family residential categories account for 83.7 percent of peak month water use. Peak day demands are greater; in 2003, the peak day demand for the entire system was MGD, or 1.93 times the annual average demand. For maximum impact, price increases should be targeted at reducing peak day single-family residential, commercial, and multi-family residential water use. Table 4.2: Breakdown of 2003 Peak Month Water Use by Category User Type Annual Water Use (MGD) Percentage of Annual Billed Water Use 19 of 61 Peak Month to Annual Average Water Use Peak Month Water Use* (MGD) Percentage of Peak Month Billed Water Use Billed Water: Single-family residential Multi-family residential Commercial Industrial Golf Course Utility Wholesale Subtotal Billed Water Unbilled Water N/A N/A N/A TOTAL N/A N/A N/A * These peak demands did not all occur in the same month, so the Subtotal Billed Water is the sum of the peak month water use for each category Single-Family Residential Rates Table 4.3 shows a single-family residential rate structure that includes a fifth tier for use exceeding 25,000 gallons per month. The exact boundary of the fifth tier should be determined during a water rate study. In Table 4.3, the monthly charge and the rates for the first two tiers increase at the inflation rate (assumed to

20 be 2.4 percent per year) each year. The rate for the third tier increases by 6 percent per year for 5 years and increases at the inflation rate thereafter. The rate for the fourth tier increases by 10 percent per year for 5 years and increases at the inflation rate thereafter. Finally, the rate for the fifth tier increases by 15 percent per year for 5 years and increases at the inflation rate thereafter. Rates are assumed to change beginning January 1, Note that the rates shown in Table 4.3 are not adjusted for inflation. In real (inflation-adjusted) terms, the monthly charge and the rate for the first two tiers remains unchanged. As shown in Table 4.4, the suggested rates lead to an increase in the real average unit price of 2.4 to 2.7 percent per year. The potential water savings due to an increase in water price is shown in the following equation: S = 0.01 * D * (ε p* P + ε i* I) where S is the potential water conservation savings (ac-ft/yr), D is the total water demand (ac-ft/yr) with no change in price or income, ε p is the price elasticity of water demand, P is the change in real price (percent), ε i is the income elasticity of water demand, and I is the change in real income (percent). To estimate potential water savings for the potential water prices shown in Table 4.3, it has been assumed that the population will increase as shown in Austin s Water Conservation Plan 2, that the price elasticity of water demand is -0.17, that the income elasticity of water demand is 0.00, and that the distribution of usage versus number of connection follows is similar to that experienced in July Tables 4.5 and 4.6 show potential changes in peak month water use and average month water use. Recently, the utility has been struggling with an issue concerning master metering of residential subdivisions, where a subdivision is installed with a master meter and submeters for the individual homes. This is generally to accommodate gated communities. The problem lies in the lack of assurance that there will be individual metering of each home or housing unit; and more importantly, these communities are currently charged a multifamily rate. These conditions may insulate these users from any impact of increased rates. The City may want to consider establishing separate master meter rates based on the residential rate for each community so that customers would be paying the same for water as if there were billed directly by the Ctiy. This would require the City to require the submetering company to charge the City residential rate. The City may also want to require direct utility metering of these types of communities in the future MF/ICI Customer Water Budgeting The City could also create an inclined block rate structure for MF/ICI customers that is similar to the single-family residential rate structure, except that the tier boundaries are set using water budgets for individual customers. As an example, Table 4.7 shows the MF/ ICI rate structure used by the San Antonio Water System. The water budget for a customer may consist of a fixed component (representing indoor water use) and a variable component (representing outdoor water use), so that the budget may be different for each month of the year. As an example, Table 4.8 shows the base allocation for multi-family and ICI customers of the Irvine Ranch Water District (IRWD). The IRWD allows variances on a case-by-case basis for more people living in the home, special medical needs, etc. At this time, water budgeting is not in widespread use, so there are few reliable estimates of savings. California water utilities that implemented water budgeting for irrigation water use experienced decreases of 20 to 37 percent in water applied to landscapes 14. The Irvine Ranch Water District (IRWD) implemented evapotranspiration-water-budget-based rates in 1991, and experienced a 19 percent decrease in water use the first year 15. Through 1998, the IRWD reported non-drought-period savings of 9 percent for residential customers 15 and commercial landscape water savings of 54 percent 16 (although some of these savings may 20 of 61

21 be attributable to other conservation programs). Preliminary results from the Centennial Water and Sanitation District in Colorado indicate achievement of a 20 percent reduction in overall water use 17. Although several estimates of actual savings are presented above, there is no accompanying information about the impact of other conservation programs, about price elasticities of water demand, or about other utility-specific factors. Based on limited information, it appears that a 5 percent reduction in annual multifamily residential and ICI water use may be a conservative estimate of the potential for water savings through adoption of a multi-family residential and ICI rate structure similar to the SAWS rate structure (Table 4.7) and an allocation method similar to the IRWD method (Table 4.8). Table 4.9 shows the potential peak month and annual water savings assuming a 5 percent reduction in annual and peak use, and full implementation. Actual savings from this change in rate structure will depend on the levels of the different tiers, the associated rates, and the allocated water budgets. Because this change is particularly complex, a detailed rate study should be performed to set the rate structure and to identify expected changes in revenue. The opinion of probable unit cost for the water budgeting conservation measure ranges from $0.03 to $0.15 per thousand gallons, depending on the year Irrigation Rates for MF/ICI Customers Since 1998, Austin has required that all commercial or multi-family residential customers with a site plan area of more than 10,000 square feet must purchase and install a separate meter or meters for all irrigation, fountain, swimming pool, and/or any other outdoor use of water. Currently, the Utility has more than 2,500 irrigation accounts. In 2004, these accounts had a billed water use of approximately 0.65 billion gallons, or about 1.3 percent of total pumpage. The Utility could require retrofit of pre-1998 commercial and multi-family residential connections with a site plan of 10,000 square foot or more with separate irrigation meters by January 1, 2012, and could implement an irrigation rate structure for irrigation accounts that would reflect the cost of providing water during the summer when most irrigation takes place. To estimate the potential savings from retrofit of irrigation meters and an irrigation rate structure, the following assumptions have been made: The effective irrigation rate will increase by 10 percent per year for 5 years (beginning January 1, 2007) and increase at the inflation rate thereafter. The elasticity of demand for irrigation water is -0.17, which is the elasticity of demand for total water use from the 1999 TWDB study. This is a conservative assumption, because irrigation water use should be more elastic than total water use. 21 of 61

22 Table 4.3: Potential Unit Prices for Single-Family Residential Customers* ($/1,000 gallons) Tier Monthly charge (5/8 meter) $4.35 $4.35 $4.45 $4.56 $4.67 $4.78 $4.90 $5.02 $5.14 $ ,000 gallons $0.86 $0.86 $0.88 $0.90 $0.92 $0.95 $0.97 $0.99 $1.02 $1.04 2,001 9,000 gallons $2.29 $2.29 $2.34 $2.40 $2.46 $2.52 $2.58 $2.64 $2.70 $2.77 9,001 15,000 gallons $3.70 $3.70 $3.92 $4.16 $4.41 $4.67 $4.95 $5.07 $5.19 $ ,001 25,000 gallons $6.42 $6.42 $7.06 $7.77 $8.55 $9.40 $10.34 $10.59 $10.84 $ ,001 over gallons $6.42 $6.42 $7.38 $8.49 $9.76 $11.23 $12.91 $13.22 $13.54 $13.87 Average unit price $3.18 $3.18 $3.34 $3.50 $3.68 $3.86 $4.06 $4.16 $4.26 $4.37 *Not adjusted for inflation Table 4.4: Potential Percentage Changes in Real Unit Price for Single-Family Residential Customers* Tier Monthly charge (5/8 meter) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0 2,000 gallons 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2,001 9,000 gallons 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 9,001 15,000 gallons 0.0% 0.0% 3.5% 3.5% 3.5% 3.5% 3.5% 0.0% 0.0% 0.0% 15,001 25,000 gallons 0.0% 0.0% 7.4% 7.4% 7.4% 7.4% 7.4% 0.0% 0.0% 0.0% 25,001 over gallons 0.0% 0.0% 12.3% 12.3% 12.3% 12.3% 12.3% 0.0% 0.0% 0.0% Average change 0.0% 0.0% 2.4% 2.5% 2.6% 2.6% 2.7% 0.0% 0.0% 0.0% *Adjusted for inflation Table 4.5: Potential Changes in Peak Month Water Use for Single-Family Residential (mgd) Tier ,000 gallons ,001 9,000 gallons ,001 15,000 gallons 0.00 (0.09) (0.19) (0.29) (0.39) (0.50) (0.51) (0.52) (0.53) 15,001 25,000 gallons 0.00 (0.27) (0.55) (0.84) (1.13) (1.44) (1.46) (1.49) (1.51) 25,001 over gallons 0.00 (0.60) (1.20) (1.81) (2.43) (3.07) (3.12) (3.18) (3.24) Total 0.00 (0.96) (1.94) (2.94) (3.96) (5.01) (5.09) (5.18) (5.28) 22 of 61

23 Table 4.6: Potential Changes in Average Month Water Use for Single-Family Residential (mgd) Tier ,000 gallons ,001 9,000 gallons ,001 15,000 gallons 0.00 (0.07) (0.14) (0.22) (0.30) (0.38) (0.38) (0.39) (0.40) 15,001 25,000 gallons 0.00 (0.12) (0.24) (0.37) (0.50) (0.64) (0.65) (0.66) (0.67) 25,001 over gallons 0.00 (0.19) (0.37) (0.57) (0.76) (0.96) (0.98) (1.00) (1.01) Total 0.00 (0.38) (0.76) (1.16) (1.56) (1.97) (2.00) (2.04) (2.08) Table 4.7: San Antonio Water System Monthly Volume Charge for Multi-Family Residential and ICI Customers c ($/1,000 gallons) Tier Charge 0 100% of Base Allocation $ % of Base Allocation $ % of Base Allocation $ % of Base Allocation $1.931 Over 200% of Base Allocation $2.854 c There is also an availability charge based on meter size, a Water Supply Fee of $1.378 per thousand gallons, and an Edwards Aquifer Authority permit fee of $ per thousand gallons. 23 of 61

24 Table 4.8: Irvine Ranch Water District Base Allocation for Multi-Family Residential and ICI Customers Account Type Multi- Family Residential Notes: Base Allocation Number of Residents Landscape Area (acres) 2 per unit Site specific based on irrigated acreage ICI NA Site specific based on irrigated acreage 27,154 converts from acre-inches per day to gallons per day ET is evapotranspiration (inches per day) K c is the crop coefficient 1.25 is an adjustment for irrigation system efficiency Base Allocation Indoor (gal/day) 150 gal/unit/day * number of units Site specific based on productivity, employees, water use efficiency practices, etc. Base Allocation Outdoor (gal/day) 27,154 * ET * K c * 1.25 * irrigated acreage 27,154 * ET * K c * 1.25 * irrigated acreage Total Allocation (Indoor + Outdoor) * days in bill service period Site specific, adjusted for days in bill service period Table 4.9: Potential Water Savings for MF/ICI Customers Through Water Budgeting with Full Implementation (mgd) Type Peak month (4.50) (4.59) (4.67) (4.75) (4.84) (4.95) (5.02) (5.12) (5.21) Annual (3.51) (3.58) (3.64) (3.71) (3.78) (3.86) (3.92) (3.99) (4.07) 24 of 61

25 Water use by irrigation meters was capped at the projected seasonal water use for MF/ICI customers, which may cause underprediction of the potential water savings d. Table 4.10 shows the associated potential savings. Some of the potential water savings from retrofitting MF/ICI irrigation meters and implementing an irrigation rate structure are already included in the potential water savings from the MF/ICI water budgeting conservation measure described in Section and Table 4.9. Therefore, implementation of both measures will not result in the full potential savings from both measures. Table 4.10: Potential Water Savings for MF/ICI Customers Through Irrigation Rates (mgd) Type Peak month 0.00 (0.15) (0.48) (1.03) (1.82) (2.41) (2.45) (2.50) (2.54) Annual 0.00 (0.06) (0.18) (0.39) (0.69) (0.91) (0.93) (0.94) (0.96) Wholesale Rates Wholesale water use comprises 9 to 10 percent of peak day total water use. Wholesale water rates are fixed by contract between the City of Austin and the wholesale entity. As each existing contract expires, the City should consider adding a conservation rate structure to the new contract. One possibility is to implement a base rate for off-peak demand periods and a peak rate for peak demand periods. The contracts with Anderson Mill Municipal Utility District and Lost Creek Municipal Utility District expire within the next five years (June 9, 2007, and July 7, 2007, respectively). Potential savings from changes to these contracts have not been projected. 4.5 Reliability Reliability is the degree to which the potential water savings from a conservation strategy can be predicted. One factor that affects reliability is customer behavior. Customer behavior can be difficult to predict; therefore, conservation strategies that require changes in behavior may be less reliable than those based on technological improvements. Another factor is uncertainty in the data used to estimate the potential water savings. Customer participation is highly reliable for changes in the water rate structure and water rates, since these changes automatically affect all water customers. However, two issues regarding the price elasticity of water demand cause the reliability of the savings estimates to be low: The price elasticities of water demand are based on actual (though somewhat dated) water usage data. However, the price elasticity can change over time as socioeconomic conditions change or as the price of water changes. Because of decreases in Austin per capita water usage since 1990, the current price elasticities of water demand is more likely to be -0.17, as reported in the 1999 study, than the to , as reported in the 1991 study. However, there is a significant amount of uncertainty in this estimate. d In 2004, actual water use for irrigation meters was 2.9 billion gallons, which was 79 percent of seasonal water use for MF/ICI customers (3.65 billion gallons). However, by 2004 the irrigation meter requirement had only been in effect for 6 years, so presumably a minority of MF/ICI customers with a site plan area of 10,000 square feet or more had irrigation meters. This appears to indicate that, when all eligible MF/ICI customers have irrigation meters, water use registered by irrigation meters may be much greater than projected seasonal water use. If true, it also indicates that seasonal water use does not capture all irrigation water use, because some customers are irrigating in the winter. 25 of 61

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