Request for Ideas: Demand Effects of Water Rates

Objective: Improve water sales forecasting under different rate structures

The California Data Collaborative (“CaDC”) operates a unique inter-utility customer water use data warehouse on behalf of water utilities serving 22 million Californians and is soliciting proposals on the effects of price on water demand.  

Water rates play a critical role in funding utility operations, and they are also increasingly used as a tool to encourage conservation in a world of unpredictable supply constraints. Rates, revenue, and demand are tightly coupled and a more granular understanding of how these factors interact across different hydrologic, socioeconomic, and other unique local circumstances will enable water utilities across California to more effectively plan for an uncertain future.

As such, the Collaborative is looking for research proposals that would make use of our data to answer questions such as the following:

  1. How accurate are current rate models at predicting demand changes due to a rate shift?

  2. What prices do customers respond to most strongly: marginal price, average price, or total bill? How do the differences in these effect sizes compare with recent behavioral approaches such as changing how information is presented on a bill?

  3. How does price elasticity change during severe drought conditions and mandatory conservation requirements?

Available Data

The California Data Collaborative collects and curates customer-level metered water use data from a number of California water utilities. Contingent upon utility approval, access to this data may be granted to external researchers to conduct studies that benefit the entire water community in California.

Current participating utilities include:

  • Moulton Niguel Water District (MNWD)
  • Irvine Ranch Water District (IRWD)
  • Santa Margarita Water District (SMWD)
  • Eastern Municipal Water District (EMWD)
  • Monte Vista Water District  (MVWD)
  • Las Virgenes Municipal Water District (LVMWD)

Prospective utility partners include:

  • Western Municipal Water District (WMWD)
  • City of Sacramento (Sacramento)
  • El Toro Water District (ETWD)
  • City of Anaheim (Anaheim)
  • City of Newport Beach (Newport)
  • Los Angeles Department of Water and Power (LADWP)

The data include basic monthly billing information such as amount of water consumed, and date of use, along with key contextual attributes such as evapotranspiration, customer class, and in some cases household size and irrigable area. Utility specific customer classes have been standardized into statewide classifications aligned with the Department of Water Resources (single family residential, multi-family residential, commercial, industrial, irrigation, institutional and other).  In many cases information is also available about which customers participated in water efficiency rebate programs like turf removal or high efficiency toilet rebates.

The SCUBA data warehouse is a growing repository, and new contextual attributes are in development such as assessor parcel numbers that allow matching to county assessor property attributes, and census identifiers that allow inclusion of census block and tract statistics.

Example Study Ideas

The following have been identified as areas of interest that may yield insights into the effect of prices and rate structures on water demand. This list is not exhaustive and serves mainly to highlight the types of studies made possible through the unique inter-utility data set maintained by the collaborative.

  1. LVWMD and SMWD recently updated their rates (the links below show their prop 218 Notices)

    1. http://www.smwd.com/assets/downloads/2015-prop-218.pdf

    2. http://www.lvmwd.com/home/showdocument?id=2005

  2. Natural and Quasi-experiments

    1. Many participating agencies share borders, allowing for the discovery of quasi-experimental setups where factors such as weather, local regulation, and even environmental attitudes may be implicitly controlled for. This allows for more accurate assessment of the impact of rates and rate shifts. Examples:

      1. EMWD / WMWD

      2. IRWD / MWND / El Toro / SMWD / Newport Beach

      3. LVMWD / LADWP

    2. Utilities sometimes consolidate with one another, resulting in what can be seen as an exogenous shock. One example is IRWD: (http://www.irwd.com/about-us/consolidations)

      1. Orange Park Acres - find effect of “water rate differential” and the ultimate transition to match IRWD rates on July 1, 2015.

  3. Testing how customers respond to total bill / average price / marginal price

  4. Compare price elasticities between customers under automated e-billing schemes and those that receive a paper bill to test the effects of information disclosure.

Submit an idea for a study

*All studies leveraging CaDC data must make the underlying code available.  

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