Conservation and the municipal water finance dilemma

Matt Weiser takes us into the strange world of California municipal water infrastructure finance, where costs are relatively fixed and vendors are trying to sell less of their product:

[M]any water agencies are feeling the strain because they had already delayed imposing rate increases for a number of years due to the drought and a reluctance to strain ratepayers. The drought aggravates things because water conservation mandates reduce the amount of water they sell, thereby reducing revenues.


One Comment

  1. And it’s the same phenomenon in the electrical generation industry, although what we’re learning about renewable energy does not translate easily to water, see below.

    While companies like SolarCity make it painless for homeowners to get solar electric capability, utilities are still in their traditional business model of generation and distribution. That does not include running very many of their meters backwards some of the time, thus being a corporation-sized battery for storing energy.

    So their rear-guard actions include imposing fees on homeowners who have solar-electric capability, getting state legislatures to ban companies like SolarCity, disinformation campaigns, etc. In CA, OTOH, electricity from home-scale solar must be bought and sold back at the same rate, and no additional fees are allowed.

    With garage-scale battery technology coming online, utilities will suffer even more as they can’t even see the home-scale electrical generation going on. If I can run my house most days with local generation while charging my garage battery to run into the evening, switching to utility power after that will reduce my bill immensely without running a meter backwards.

    To survive, they will need a business model focused on long-distance transmission and local distribution of excess production from elsewhere to where it’s needed in the short term. Somewhere the sun shines or the wind blows all the time. If large-scale storage economies work, that could be part of their mix.

    Why water usage innovation does not align with electricity trends?
    * Very few of us have or want our own private wells or water storage tanks.
    * Long-distance water transmission (outside of rivers–going downhill of course) is economically infeasible as every analysis has shown.
    * Economy of scale works for water, doesn’t for electricity any more.

    I wish there were more to learn from the renewable electrical energy revolution, but I don’t see it.

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