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Recently in Water Prices Category

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. 

Interesting Links:

Comparison of Water Costs

National Energy Prices

Water Rates

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One of my good friends, Pete Garcia, always complains about Santa Fe water rates. "We have the highest water rates in the country," he says. Well, Pete, I hate to say it, but that is just about correct.  Our base water rates aren't the highest in the country, but as our tiered and summer water rates schedule kicks in, we do have some of the highest rates. Yet compared to other cities in the world, our water is still downright cheap. 

In almost any place in the United States, we simply turn on the faucet and it flows. This amazing infrastructure was built over the last century and has supplied us cheap, plentiful water for decades. Abundant water, cheap electricity and a great road system have been the backbone of our economy over the last century. However, access to cheap, plentiful water is becoming a thing of the past, not only in the Santa Fe area, but around the country and the world. 

In the United States, we are fortunate to have accessible clean water at any price. Over 46% of the earth's population doesn't, and people in developing countries walk an average of 3.7 miles to get access to water. One in eight people on the planet lack access to clean water. 

Access to an additional water source has been the main driver for Santa Fe's multi-year water rate increase (i.e., 8.2% annual increase from 2009 - 2014).  Our local Buckman Direct Diversion (BDD) project is estimated to cost more than $200 million and will provide both the city and county access to 5,605 acre-feet of San Juan-Chama Project water per year (an acre-foot is approximately 325,851.4 gallons).

This water is more expensive than water pumped out of the ground or piped in from local reservoirs. But even this source will not provide us with all the water we will need in the future. We live in a high desert, arid region and simply do not have enough drinking water to meet our growing needs. Per the City of Santa Fe Water Conservation and Drought Management Report, we are over-pumping the groundwater wells resulting in damage to the underground aquifer. Even in the best of years, the Santa Fe River reservoirs can only supply about half of the water our region needs. In very dry years, they cannot supply much water at all and emergency water restrictions have had to be put in place.

Due to projects like this, in which water is accessed from further away or it is of lesser quality and requires more processing, , water rates are rising here and around the world.  Most cities are now facing similar challenges. 

For example, the city of Las Vegas, Nevada, which has historically enjoyed cheap water, faces the possibility that Lake Mead, the city's prime water source, will run dry in 13 years if usage is not cut back. The city's water agency, the Southern Nevada Water Authority, has undertaken a $700 million project to dig a bigger pipe into the lake. Scott Huntley, a spokesman for the agency, said they are concerned that the city is relying almost entirely on Lake Mead for its water, and officials were seeking alternate sources. Las Vegas is turning to rural counties to the north to quench a thirst that the nation's largest man-made reservoir can't sustain. Plans include drilling wells and building a $1-billion pipeline to tap rivers and groundwater from neighboring rural counties. This will not be cheap water.

Comparing data in the recently released Black & Veatch 2009/2010 Water/Wastewater Rate Survey, -Santa Fe has the fourth highest rates of the 200 hundred US cities included in the survey, behind San Diego, Seattle and Baltimore, in descending order. This comparison is looking at Santa Fe's rates for 3,500 gallons per month, not including sewer, connection charges, taxes or any other fees or summer usage rates.

However, at 15,000 gallons per month or more, Santa Fe has the highest rates of all the cities included in the survey. The City of Santa Fe's tiered rate structure of $15.81 per 1,000 gallons consumed makes our water cost almost twice as much as the nearest city: Austin, Texas.

For the cities included in the survey, the average cost of water from 2001-2009 has increased at a rate two times that of the Consumer Price Index (CPI). These rate increases are being driven by the increase in energy prices, increased demand, aging infrastructure, and the distance and water quality problems mentioned above.

In another study, the Global Water Intelligence (GWI) published a survey of water rates in 261 cities worldwide. In that survey, Santa Fe is not even close to the top, in fact, US water appears downright cheap compared to other cities in the world. The lovely cities of Copenhagen and Aarthus, both in Denmark, the price of water is more than $20.00 per 1,000 gallons versus $5.81 in Santa Fe [you said $15.81 two paragraphs up]. Other cities that are by far more expensive are Paris, France; Gent Belgium and Stuttgart, Germany -- all over $10.00 per 1,000 gallons. It is worth noting that more than a few international cities provide water free or nearly free and these cities are some of the largest water consumers.  

In Santa Fe, we are blessed to have had a drought that forced our hand to become much more focused on water conservation, to raise our water rates, and to create a tiered rate system to motivate the biggest water consumers to cut back. These forward-thinking measures are why we have enough water today, and we should thank our city staff for this. Our city is now one of the lowest water use cities in the United States. But even with all these efforts, expect water rates to continue rising. 

To avoid the highest water rates, conserve water to keep your water usage below 7,000 per month from September to April and 10,000 per month from May through August.  Water is not just a life-giving resource, it is also an economic engine. There is simply no more plentiful "cheap" water; consequently, water conservation will remain key to sustaining the beautiful area we live in.


The real news is why a 50% rate hike is required - WATER CONSERVATION. Per the story linked below:


Chambers attributes the "sharp spike" this year to a drop in water use.

"There has been a significant drop in the consumption of water," Chambers said. "When the city asked people to conserve water, people responded and significantly reduced their consumption. When the council did that, we were acutely aware - (Councilman) Doug Crane talked about it often - that would affect the utility itself, and the drop in consumption impacted revenues significantly."


So the easy net of the story is we pay if we conserve and we pay if we don't.

Well not quite.  Yes it is true that without water conservation the revenues to the water utility would have been the same.  But the conservation really did save water and energy. 

The new rates probably really more closely reflect what the water company should have been charging in the first place. But this is definitely the first time I have seen a water official publicly state that conserving water will drive water rates up.  Though I am not sure I totally buy the argument. Less water used means less water obtained/purchased, less water processed and less transported as well as substantially lower power bills.  It may mean they did not want to cut staff thinking that demand will rise again and they will need these folks when it does. 

Here is a link to the story:

What do you think?
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Double Digit Water Rates Continue

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Water rates continue to rise.  Lake Tahoe and Clovis, New Mexico lead the current list of large increases at 70% and 65% respectively.

Water has been way too inexpensive for way too long.  But the days of cheap water are ending due to multiple pressures: population growth in areas of little rain or natural water sources (i.e. Phoenix, Las Vegas, Albuquerque); natural drought cycles (i.e. Atlanta, California); and our aging and decaying water infrastructure, 
The bad thing is that rates will continue to increase whether we conserve or not.  If we don't conserve rates will just escalate faster as cities and towns try to solve the ever increasing demand for water by either drilling deeper and deeper more costly wells or by building piping systems to haul water from far away places (e.g. Las Vegas, NV). These both will ensure water price increases for the foreseeable future not just due to the costs of the projects, but also due to the rising rate of electricity which they require.

Even in these harsh economic times, local companies and politicians are approving double digit water rate increases.  That they are willing to do this during these times, shows the real extent of the problem. 

See a small sample of these rate increases for the last few months:

The good thing about these increases is that they will drive more and more installations of rainwater catchment.  Money talks and the pain of paying high monthly water bills will drive individuals to consider other alternatives.  It did for me.  I installed my first system due to rising rates over a decade ago when my water bill started hitting $100 a month.  The payback was long then, but has declined substantially since then due to rising water rates.

Today, installing some type of rainwater catchment system, either passive or active, is starting to just make good economic sense!
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As reported recently by Water Online, water customers in many parts of the U.S. are facing rate hikes due to the sagging economy and decreased demand, according to an Associated Press story published by the Water Environment Federation. Manufacturing closures and cut-backs, a poor real estate market, and a downturn in tourism were cited as causes for the drop in water usage, exemplified in southern Maine by an 11 percent drop in sales last year for the Kennebunk, Kennebunkport & Wells Water District.