A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
The conservation conundrum: How declining demand affects water utilities
This article discusses the significant financial challenge that utilities face in the rising infrastructure costs that must be recovered from a shrinking sales base. Fortunately, strategic coping methods are available such as forecasting, scenario‐building, and planning. Utility plans should incorporate long‐term goals and performance metrics as well as prudent investment strategies based on changing demand patterns. Cost recovery should recognize expenditures for cost‐effective investments in efficiency, and regulators can provide additional incentives as appropriate. As long as costs and demand continue to shift, more frequent rate adjustments will help reduce lag and ensure that rates are properly aligned with costs. Forward‐ looking rates can be established by using a “future test year” for revenues. A demand‐repression adjustment may be needed to recognize the effects of programs and prices on forecast use. Utilities will also need to examine rate‐design options and assess whether they exacerbate or mitigate revenue volatility, uncertainty, and distributional consequences.
The conservation conundrum: How declining demand affects water utilities
This article discusses the significant financial challenge that utilities face in the rising infrastructure costs that must be recovered from a shrinking sales base. Fortunately, strategic coping methods are available such as forecasting, scenario‐building, and planning. Utility plans should incorporate long‐term goals and performance metrics as well as prudent investment strategies based on changing demand patterns. Cost recovery should recognize expenditures for cost‐effective investments in efficiency, and regulators can provide additional incentives as appropriate. As long as costs and demand continue to shift, more frequent rate adjustments will help reduce lag and ensure that rates are properly aligned with costs. Forward‐ looking rates can be established by using a “future test year” for revenues. A demand‐repression adjustment may be needed to recognize the effects of programs and prices on forecast use. Utilities will also need to examine rate‐design options and assess whether they exacerbate or mitigate revenue volatility, uncertainty, and distributional consequences.
The conservation conundrum: How declining demand affects water utilities
Beecher, Janice A. (author)
Journal ‐ American Water Works Association ; 102 ; 78-80
2010-02-01
3 pages
Article (Journal)
Electronic Resource
English
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