AWWA ACE60092

The recent experience of two very similar medium-sized water systems in Hawai'i provides a case study in the role of an inverted block rate structure in helping to promote conservation. The County of Hawai'i Department of Water Supply (Hawai'i DWS) serves potable water to approximately 36,600 residential, commercial, and agricultural customers on the island of Hawai'i. The County of Kaua'i Department of Water (Kaua'i DOW) serves approximately 18,400 residential, commercial, and agricultural customers on the island of Kaua'i. In July 2001 both water systems implemented large rate increases (approximately 29 percent at Hawai'i DWS and approximately 32 percent at Kaua'i DOW) to fund significant capital improvements needed on each island. A major difference between the two systems, however, was their rate structures. Hawai'i DWS has maintained an inverted block rate structure for all of its customers for more than two decades. Kaua'i DOW previously had a uniform (flat) rate structure and in 2001 initiated an inverted block rate structure for its customers. Although the two utilities are similar in many aspects (including customer profiles and overall weather conditions), a preliminary review of customer reactions to these two large rate increases suggested a more significant reduction in water usage at Kaua'i DOW than at Hawai'i DWS since 2001. This paper compares the water usage experiences at Hawai'i DWS and at Kaua'i DOW since 2001. In particular, the paper examines and quantifies the effect of implementing an inverted block rate structure at Kaua'i DOW in 2001. A review of water consumption patterns at the two water systems is presented to compare whether Kaua'i DOW's switch from a uniform rate structure to an inverted block rate structure corresponded with significant changes in water demand patterns, and if these changes are different from those at Hawai'i DWS. Specifically, this paper considers the hypothesis that an initial conversion to an inverted block rate structure can reduce water consumption, but then, once an inverted block rate structure is established, further changes in rate structure have less impact on water consumption. These and other rate related water conservation topics are addressed in the paper. Includes tables, figures.