The costs of energy and water are both rising, but the cost of water is rising faster, and at some point our monthly water bill will exceed our monthly electricity bill. This is not just a local phenomenon; it is happening around the country. In fact, the rapid rise of water rates is one reason I got interested in water conservation and rainwater harvesting.
In Santa Fe area our local electricity service provider, PNM, has raised rates 45% since 2008. Starting in 2009, the local water rates have gone up 8.2% a year and will continue to do so through 2014, for a total increase of 48%.
Although locally it appears that the two are increasing at the same rate, the national picture shows a different long-term trend. Nationally, electricity rates have gone up a little over 2% percent annually since 2008, while water rates have gone up about 8% a year.
Different forces are driving these increases. Electricity rates are rising due to increasing operating costs (i.e. the increasing costs of the raw materials needed to make energy, such as coal, gas and water are all going up). While the price of water is going up to pay for improvements in infrastructure (replacing aging pipes and improving water treatment facilities); but it is also rising due to the increased costs of acquiring new water. The Santa Fe Buckman Direct Diversion (BDD) costs nearly $200M to complete and is by far our most expensive water source.
The major difference between electricity and water is that there are available alternatives to traditional electricity generation systems, but no one yet has invented an alternative to water. As reported in the news recently, the price of solar panels has dropped significantly over the past few years due to the ramping up of manufacturing in China. Consequently, the cost of solar panels is now typically less than the labor in installing a new system. As more solar panels are manufactured and installed and more installers enter the market, prices will continue to decrease over the foreseeable future. This "new power generation system" provides a direct alternative to power supplied by the electrical grid. In fact, solar power is likely to become a cost-effective alternative to the traditional energy grid within this decade.
By comparison, water has no alternative and dehydrated water hasn't been invented as of yet. The only major way for a municipality to increase its water supply is to make improvements in the efficiency (e.g. fixing leaks, conservation programs, and wastewater reuse) or successfully bidding against other municipalities for new supplies. There is no more easy water. New sources of water are going to be much more expensive because they will have to be transported further and processed more.
Consequently, water prices here and nationally will continue
to rise while at the same time solar power and other "green" alternatives will
keep a downward pressure on overall electricity rates. Conserving water is the cheapest way to help
keep water prices down, but "up, up, up" is the trend and is likely to be that
way for the foreseeable future.