AWWA ACE91031

Faced with projected water shortages, the Tampa, Florida, water system instituted rate changes to encourage water conservation. The system changed the rate structure from a flat rate to an inclining block rate. The base rate is $0.77 per 100 ccf for all customers, which is the same as the previous flat rate. A higher conservation rate of $1.25 per ccf applies to water use in excess of established limits for each customer class: 13 ccf for residential and small industry, 25 ccf for small commercial establishments, and so forth. Enough water is being saved to delay the need for additional supplies into the next century. The price of water is most effective for customers whom it affects directly; customers, such as apartment dwellers, who do not experience the financial impact directly, are less likely to conserve. Price elasticity is computed for various types of customer; this information can help managers forecast how water use will be affected by rate changes.