Duncan, British Columbia
Designing New Rates to Improve Conservation and Equity - On a Very Tight Deadline
Customer since 2019 | Population: 4,944
CHALLENGES
- A very short time frame within which to redesign rates and obtain approvals.
- The need for a new rate structure that would continue to allow the City to recover costs while providing customers with sufficient incentive to change behaviour.
- The need to design a metered water system would allow some residents to lower their bills.
RESULTS & BENEFITS
- A new rate design that allows the City to meet its objective to charge customers for what they consume, providing an opportunity to lower their bills.
- Guidance from industry experts, for the price of a software subscription.
- A more equitable rate structure backed by third-party support.
BACKGROUND
The City of Duncan is a small community in British Columbia, about 60 kilometres north of Victoria and its water system serves approximately 3,800 accounts. Duncan began installing water meters for commercial and large residential customers many years ago, and in 2015 the City began installations for the remaining customers.
Initially, the City designed a metered rate structure that included a minimum charge for a base consumption amount of 340 cubic metres (74,789 gallons) per meter annually, plus tiered rates for any consumption above that amount. With this rate structure, their primary focus was on cost recovery.
However, as a system reliant on groundwater, high demand during the summer months was a growing concern. They needed more emphasis on improving water efficiency, which would require changes in consumer behaviour. “A lot of our problems are seasonal,” says Claudia McMahon, Duncan’s Manager of Financial Services. “We don’t have a lot of water in the summer.”
MEETING OBJECTIVES
A deeper analysis of usage and billing data made it clear that the existing rates would not allow customers to equitably reduce costs by reducing consumption. Because the minimum charge was virtually the same as the previous flat rate, the impact on customers’ water usage behaviour would be minimal, especially for those who rarely exceed the base consumption amount. The City realized they needed a rate structure that would continue to allow them to recover costs while providing customers with sufficient incentive to change behaviour.
And with the objective for the new rates to take effect January 1, 2020, time was a critical concern. To create a rate structure that would meet their objectives, within the short timeframe available, Duncan staff turned to Waterworth.
REDESIGNING RATES WITH WATERWORTH
Prior to using Waterworth, City staff performed rate analysis and rate design in-house. Duncan’s first metered rate design would continue to address the need for cost recovery, however it was limited in incentivizing reduced consumption and helping customers reduce their bills by changing behaviour. With Waterworth’s help, City staff were able to design a rate structure that would accomplish all three objectives. That rate structure consists of a fixed charge, based on meter size, an annual per unit charge for large residential buildings, and a consumption charge that applies to all water consumption, for all customers.
The City also incorporated customer feedback gathered through a public engagement process when designing their new rate structure. When some significant rate impacts were uncovered for certain customer classes, Staff were able to easily tweak assumptions and rates within the Waterworth platform to balance the rate impacts.
Even with an extensive background in utility rate setting, McMahon saw the value of Waterworth right away. “I knew I could calculate [the new rates] myself,” she says, but constraints on her time made Waterworth’s help invaluable. Not only that but she also found Waterworth’s support team extremely useful in helping to verify her assumptions and making sure nothing was missed.
PROFESSIONAL SUPPORT THAT’S ‘LIKE HIRING A CONSULTANT’
McMahon was particularly impressed with the depth of experience Waterworth support staff demonstrated, providing expert guidance that lends credibility. Help with calculating meter service fees based on meter size was especially helpful. McMahon says without Waterworth, she, “… would not have had the ability to calculate that.” That level of professional support, combined with a software tool that allowed her to perform ongoing in-house analysis, was the best of both worlds. “It was like hiring a consultant,” she says, “and it was affordable!”
Additionally, Waterworth’s ability to help without requiring a huge time commitment was critical, considering the constraints Duncan was working under. “We were concerned whether we were going to be able to make the timeline, especially because we all have other jobs to do,” McMahon says. “But we were working with Waterworth, putting it as a priority in our schedule, and we found a way to make it work.”
LOOKING FORWARD
Although she had a billing clerk to help with data entry, and McMahon wanted to understand all of Waterworth’s features more, the software was able to quickly serve her needs. And that’s one of Waterworth’s greatest strengths — it can provide quick results or help you go as in-depth as you want. It can be incorporated into your fiscal cycle to help set annual goals, while allowing you to add its different modules into that workflow piece-by-piece.
Pending approval by council, the City’s plan is to implement the new rates on January 1, 2020, for customers within city limits and a year later for customers outside the city. Looking forward, Duncan plans to use more of Waterworth’s features after the new rates are in place, to help with planning for capital projects and asset replacement. “We haven’t yet been able to [use Waterworth’s] full capacity like we’d like to,” McMahon says. “We would like to have a better understanding of what the long term rate impacts will be in the future if we do capital projects. But [once we] get the new rates in place, that will be our next step.”