Utility Business Models for Managing Water Demand Reduction

Utility Business Models for Managing Water Demand Reduction

WRF Project #5327
Thank you for contributing to WRF Project #5327, which explores how water utilities can maintain revenue stability amidst demand reductions. Your input will help identify effective, field-tested strategies in rate design, financial planning, utility services, and demand management.

This survey will take approximately 15 minutes to complete. A summary of the aggregated results will be shared with all survey participants, offering insight into how your peers are addressing similar challenges. Only aggregated or anonymized data will be published or shared. The project will not share your individual responses or otherwise attribute specific responses to your organization without your permission.

To respond most effectively, you will need input from colleagues familiar with:
- Your organization’s rate structure and financial practices
- Demand trends and planning approaches
To learn more about this project, please visit WRF's webpage here.

Questions or to request a PDF copy for preparing responses: Email us at research@a4we.org.
Your Organization
Contact Name:*

First NameLast Name
Contact Title:*
Which of the following best reflects your role? (Select only one)*

Finance / RatesConservation / Demand ManagementCustomer ServiceUtility Management / Executive LeadershipWater Resources / Supply PlanningEngineering / Capital PlanningOther
Contact Email:*
example@example.com
Water Utility Name:*
Is this a private or public utility?*

PublicPrivate
What type of water utility?*

Retail onlyWholesale onlyMix of retail and wholesaleOther
Location:*
Please select a US State or Canadian Province from the dropdown menu.
Approximate number of retail water connections:*
Approximate population served:*
Approximate Total Annual Water Demand in Millions of Gallons:*
Water Demand Trends & Forecasting

This section asks about how your organization approaches and uses long-range water demand forecasts, as well as how water demands have changed over the last 10 years.
How are long-range water demand forecasts used in your organization’s planning and decision-making? (Select all that apply)*

Master or integrated resource planning;Capital improvement planning;Rate setting and financial planning;Annual budgeting;Drought or shortage planning;Not used regularly;Other
Which of the following factors are incorporated into your long-range demand forecasts? (Select all that apply)*

Historical water use trends;Demographic/population projections;Land use/zoning or development data;Climate or weather assumptions;Water efficiency program impacts;Economic or pricing factors;Not sure;Other
How often does your organization update or revisit its long-range water demand forecasts? (Select only one)*

AnnuallyEvery 2–5 yearsEvery 6-10 yearsAs needed / no set scheduleNot sure
Looking to the future, does your current long-range water demand forecast project that total annual demands will:*

Decrease SignificantlyDecrease SlightlyNo increase or decrease from comparison volumeIncrease SlightlyIncrease SignificantlyBoth increases and decreases are planned for in our approach (e.g. scenario planning)
Looking back over the last 10 years, how have total annual water demands changed?*

Significantly decreasedSlightly decreasedStayed relatively stableSlightly increasedSignificantly increasedNot sure
How does actual total annual water demand over the past 10 years compare to what was expected, projected or planned for?*

Demand turned out to be lower than expectedDemand was about the same as expectedDemand turned out to be higher than expectedNot sure
Has a change in actual total annual demand compared to what was expected created any planning or operational challenges or benefits over the past 10 years? Note that rate impacts are explored later in the survey.*

YesNoNot sure
If answered yes, please explain:
What factors have played a role in recent demand trends (Select all that apply):*

Population growth;Population decline;Urbanization/denser development;Industrial and/or commercial development;Changes in weather or climate;Drought restrictions;System water loss due to leaks and unaccounted for water;Active water conservation strategies implemented by organization;Passive water conservation as a result of national, and state and/or local plumbing and appliance standards combined with natural replacement;Lower demand -in response to rate increases;Other
On a scale of 1 to 10, how much of a priority has implementing active water conservation and efficiency strategies been for your utility over the past 5 years? *

1

2

3

4

5

6

7

8

9

10

1 is Not a priority at all, 10 is A top organizational priority with sustained action
How would you describe the level of water efficiency and conservation programming at your utility?*

Comprehensive and well-established program with multiple active initiativesModerate program with a few targeted efforts orincentivesLimited program with minimal outreach orofferingsNo formal program, but some ad hoc effortsNo efficiency or conservation efforts currently in placeNot sure
What are the top reasons for implementing active water conservation and efficiency strategies? (Select top 2)*

Water supply reliability;Avoided costs (limiting the need for capacity expansion);Shaving seasonal peaks;Customer affordability;Supporting environmental flows / needs;Not applicable;Other
Looking ahead at water conservation and efficiency efforts, is your organization planning to:*

Increase effortsStay about the sameDecrease efforts
Budgeting and Financial Planning

This section asks about your organization's rate structures, financial planning, and experiences with revenue variability.
How often does your utility formally review and adjust water rates?*

Every yearEvery 2-3 yearsEvery 4-5 yearsEvery 6-10 yearsOnly as needed / no regular scheduleNot sure
For the majority of your customers, which of the following best describes your organization’s current volumetric water rate structure?*

Uniform Rate (same rate per unit of water for all water)Tiered / Inclining Block Rate (rate increases with usage)Seasonal Rate (rates vary by time of year)Budget-based Rate (rate tied to a customer-specific allocation)Declining Block Rate (rate decreases with usage)Other
Are different rate structures used for other customer classes? (Select all that apply)*

Uniform Rate (same rate per unit of water for all water);Tiered / Inclining Block Rate (rate increases with usage);Seasonal Rate (rates vary by time of year);Budget-based Rate (rate tied to a customer-specific allocation);Declining Block Rate (rate decreases with usage);Other
For the majority of your customers, how does your organization determine the fixed / base charge for water service on customer bills?*

Flat charge (same amount for all customers)Based on meter sizeBased on customer class (e.g., residential, commercial, industrial)Based on number of dwelling units (for multi-family accounts)Based on average or historical water useBased on meter reading frequency or billing cycleBased on cost-of-service allocation (e.g., proportionate share of fixed costs)Based on property characteristics (e.g., lot size, irrigated area)Other
Are different approachs used to determine the fixed / base charge for other customer classes? (Select all that apply)*

Flat charge (same amount for all customers);Based on meter size;Based on customer class (e.g., residential, commercial, industrial);Based on number of dwelling units (for multi-family accounts);Based on average or historical water use;Based on meter reading frequency or billing cycle;Based on cost-of-service allocation (e.g., proportionate share of fixed costs);Based on property characteristics (e.g., lot size, irrigated area);My utility does not use a different approach for different customer classes;Other
Approximately what percentage of your utility’s total water revenue comes from fixed (base) charges on customer bills?*

0-20%21-40%41-60%61-80%81-100%Not sure
How have changes in water demand impacted your utility's revenue from water sales over the last 5 years?*

Significantly increased revenuesSomewhat increased revenuesNo noticeable impactSomewhat decreased revenuesSignificantly decreased revenuesNot sure
How does revenue variability due to long-term declines in demand compare to revenue variability from year-to-year changes in demand?*

Long term trends are / have been more challengingYear-to-year variability is/ has been more challengingBoth are / have been equally challengingNeither are challengingNot sure
To what extent are the following factors a priority and influence your utility’s budget and financial planning efforts? (Rate each factor on a scale from 1 to 5, where 1 = Not a priority and 5 = Highest priority)
Increased operational costs (e.g., energy, labor, materials): *

1

2

3

4

5

1 is Not a priority, 5 is Highest priority
Reduced revenue from lower billed water use: *

1

2

3

4

5

1 is Not a priority, 5 is Highest priority
Increased capital and infrastructure investment needs: *

1

2

3

4

5

1 is Not a priority, 5 is Highest priority
Regulatory mandates and compliance costs: *

1

2

3

4

5

1 is Not a priority, 5 is Highest priority
High or Increasing levels of customer non-payments: *

1

2

3

4

5

1 is Not a priority, 5 is Highest priority
Desire to maintain affordability for vulnerable customers: *

1

2

3

4

5

1 is Not a priority, 5 is Highest priority
Management Strategies

This section asks about a variety of strategies organizations have implemented to help manage loss of revenue from conservation or other causes of water demand reductions or fluctuations.
In your opinion, how well prepared is your organization to manage revenue impacts from water demand reductions or fluctuations?*

Very well prepared and actively managing;Somewhat prepared, with some strategies in place and others in the works;Minimally prepared, with limited strategies;We are currently developing a strategy;We recognize the need but have not developed a strategy yet;This is not currently a concern for our organization;Not sure
What rate-related strategies has your organization implemented to address water demand reductions or fluctuations? (Select all that apply)*

Raise volumetric rates;Change or restructure volumetric rates;Raise fixed / base charges;Change or restructure fixed / base charges;Raising or adding fees and fines;We have not experienced fluctuating or reduced demands;Other
What revenue diversification strategies has your organization implemented? (Select all that apply)*

Increasing revenue through new utility services (e.g., bulk water and filling stations, supplemental water quality testing, insurance programs, etc.);Increasing revenue through land or related leases (e.g., for cell towers on water towers, land for solar fields, etc.);Increasing revenue through property taxes, sales taxes, or other taxes that generate utility revenue;Generating renewable energy;Other
What other financial practices or policies has your organization implemented to address fluctuating or reduced demands?(select all that apply)*

Operating reserves: General-purpose fundsset aside to buffer short-term revenue shortfalls or unexpected expenses;Rate stabilization fund: A designated fund specifically used to smooth rate increases or offset revenue variability over time;Pass-through charges: Charges on customer bills that directly reflect external costs (e.g., energy, purchased water), adjusted without a full rate review;Drought surcharges: Temporary fees added during drought or emergency conditions to recover lost revenue or fund drought-related expenses;Targeted surcharges or pricing mechanisms (e.g., peak-use, avoided-cost based pricing);Revenue decoupling: A rate design approach that separates revenue recovery from volumetric water sales, often through revenue adjustment mechanisms like a “true-up” mechanism;Minimum revenue guarantees / fixed revenue targets: Structures that help ensure a base level of revenue recovery regardless of usage fluctuations;Contractual revenue guarantees: Agreements that guarantee a minimum level of revenue from specific customers (like large contractual users or wholesale customers);Other
What planning strategies has your organization implemented? (select all that apply)*

Scenario planning: Considering multiple future conditions (e.g., wet/dry years, economic shifts) to understand possible future demands and how your utility might respond;Stress-testing or what-if modeling: Using a tool or model to simulate the impacts of different assumptions (e.g., demand levels, rate options, economic growth, etc.);Improving or validating demand forecast accuracy: Efforts to make projections more data-driven and reliable;Integrating forecasts across departments: Aligning planning assumptions across finance, operations, engineering, capital planning, water resources, conservation, etc.;Integrating customer-side water use efficiency into forecasts;Other
Who typically leads these planning efforts at your organization?*

Primarily rely on internal team to conduct modeling or planning analysesPrimarily rely on external consultants for modeling/planningA partnership of both internal team and external consultantsNot sure
For strategies listed in this section's questions that you did not select but that you would like to pursue, what have been the constraints or barriers to implementing these?
Communications

This section asks about how your organization communicates rates and related information to the public and to leadership.
When communicating about rate changes, does your organization describe changes in terms of:*

Rates (unit charges)Bills (total costs to customers)BothNot sure
How would you rate your organization’s public-facing communication regarding changes to rates and bills? *

1

2

3

4

5

6

7

8

9

10

1 is Only to meet minimum requirements, 10 is Proactive, transparent, multi-channel, and engaging
Has your organization evaluated and estimated the long-term avoided costs (e.g. avoided supply costs, avoided infrastructure costs) or any other benefits from water conservation?*

YesNoNot sure
How regularly do you communicate about results and benefits related to water conservation and efficiency programs to your governing body, e.g. Board of Directors, City Council?*

RegularlyAs needed or requestedRarelyNever or almost never
How would you rate your organization on communicating the value of water and importance of water conservation to the public?*

1

2

3

4

5

6

7

8

9

10

1 is None or limited, 10 is Robust, strategic, multi-channel, and engaging
How would you describe agency leadership’s view of water efficiency and conservation efforts? Select the option that best reflects your perspective.*

Strongly supportive and considers it a strategic priorityGenerally supportive, though not a primary focusMixed views or limited support across leadershipMinimal supportResistance from leadershipNot applicable / No active efficiency or conservation programsNot sure
Wrap Up

This section offers the opportunity to expand more on your organization's experience with this topic.
Is there anything else you’d like to share about your organization’s experience with this topic?
Are there any resources or examples from other utilities you have found to be helpful?
Based on the topics in this survey, what would you like to learn more about?
Would you be willing to be contacted by the project team about your organization’s experience and strategies?*

YesNo
Should be Empty:

Utility Business Models for Managing Water Demand Reduction

Your Organization

Water Demand Trends & Forecasting

Budgeting and Financial Planning

Management Strategies

Communications

Wrap Up