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Author      Title/Abstract      

The Effect of Peak-Load Pricing on Water Consumption and Revenues
Author: Marvin W. Winer
Date: 6/275
Presented at the Second Annual Watercare Conference, San Rafael, California, June 1975

Despite extensive study (much of it of a theoretical nature) of the use of pricing techniques to moderate water consumption (and/or peak demand), adoption of these techniques by the water utility industry has, in general, been extremely slow. Because many of the proposed pricing techniques have been based on limited data regarding the effect of price on consumption, and because many of these proposals involve significant departures from conventional rates making practice, most utilities have taken a "wait and see" attitude, hoping others would institute these various pricing techniques first and thus provide valuable data as to their effect on both consumption and revenues. It is the purpose of this paper to analyze the effects of the application of one particular pricing technique, peak-load pricing, on consumption and revenues and to illustrate that the results of such an application are fairly predictable (at least within a limited range). The risk in adopting such a pricing policy is minimal, and accordingly, the hesitancy on the part of water utilities appears unwarranted.