Water utilities can find the sweet spot between prudent financial measures and conservation.

Water utilities can find the sweet spot between prudent financial measures and conservation.

Water utilities tend to be wary of water conservation measures. After all, doesn’t water conservation mean less revenue? Many utilities already struggle financially, so why would they want to add to their woes? Everyone knows water conservation leads to reduced sales.

Well, sometimes it might, but more often it really doesn’t.

Conservation and Smart Financial Measures

While improving your utility’s finances through water conservation may seem daunting, in truth it can be as simple as taking proper care of your distribution system. Investing in the inspection, maintenance, and repair of your system can yield great net cost savings, all without reducing sales.

For example, in the Village of Whiting, WI, inspections led to the discovery of a leak at an abandoned connection which resulted in the loss of 250,000 gallons of water per day. By fixing the leak, the Village saved more than ninety-million gallons a year in water costs.

Reducing unbilled sales can both increase conservation and improve your utility’s finances (“unbilled sales” refer to the water that is distributed to customers yet is not billed to them). Under-reporting meters and billing-system glitches can often lead to this problem. Fixing these errors increases revenue by charging customers for the full quantity of water they demand. This measure also provides a greater incentive to those customers to conserve water, since they are now responsible for the full cost of the water they use.  

Benefits to Customers

Reducing sales to conserve water can provide a financial benefit to utilities and to customers. When utilities face a growing demand and start pressing up against their capacity limits, they can delay or even avoid the massive capital costs of meeting those demands.

Since 1990, the Los Angeles Department of Power and Water has encouraged conservation to minimize capital spending, resulting in about eleven billion dollars in present-day savings. The avoided costs resulted in customer bills at 25% lower than they would be otherwise.

Unique Solutions- We’re Here to Help

This method may not work for every utility. Some utilities serve communities whose demand today has fallen from historic heights due to the loss of businesses and industries. The best water conservation measures depend on the individual utility’s circumstances.

R/M has developed water conservation plans for clients, conducting thorough financial cost-benefit analyses based on individual client needs and circumstances, accounting for avoided capital costs, impact on wastewater, and many other pertinent factors. 

To discover which conservation measures could help your utility’s financial situation, please contact an expert at R/M today.

About the Author

Edward F. Maxwell

Edward F. Maxwell
Financial Analyst

Edward joined Ruekert & Mielke, Inc. (R/M) in 2017 as a financial analyst. Before joining R/M, he worked in private-sector finance, analyzing capital investments, forecasting expenses and revenue, and crafting department budgets. At R/M, he creates financial solutions for all clients, from municipalities to corporate businesses.

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