With revenue down as a result of dropping water sales, the Albuquerque Bernalillo County Water Utility Authority board at its Wednesday evening meeting will consider a 5 percent rate increase beginning July 1. The average homeowner’s water bill would rise roughly $3 per month, according to a report to be presented to the utility’s board of directors.
For the water rate nerds in the audience, the rate hike is aimed at the base rate paid by everyone, regardless of consumption. This reverses a trend in recent rate hikes of hitting the largest users with the biggest rate hikes.
As David Zetland has said many times on Aquanomics, don’t rate hikes to preserve income in the face of decreasing demand both contradict the law of supply and demand and create a death spiral in which decreasing demand leads to rate hikes leads to further decreasing demand leads to more rate hikes leads to people and companies leaving the area. The rate hikers do not seem to consider this death spiral aspect of what they are doing. Thoughts?