Tiered pricing considered by officials

Newport Beach officials are considering a plan that could have consumers paying more or less for water — depending on how good they are at water conservation — if studies support the process and city leaders agree.

Places like San Juan Capistrano and the Irvine Ranch Water District have already implemented such plans, but to most water districts, the idea of tiered pricing is new.

Tiered pricing is a method of water allocation that aims to motivate consumers to conserve. A base allocation, an amount of water that officials would deem appropriate, would be applied to each individual property for a base rate. If a household went over its allotted amount, it would be charged an increased rate for the additional water.

Those who stayed within their allotted amount would pay a base amount, a total most likely less than what consumers are paying now, said Steve Myrter, director of Newport Beach Utilities.

The idea of tiered pricing came into play after an Orange County grand jury recently sent a letter to all county water agencies about an investigation concerning water conservation. Each agency was charged to respond to the findings and make recommendations.

The matter was an urgent one for the grand jury, saying water could be at crisis levels as early as next year, according to the report. A multiyear drought, reduced snow pack and a court order reducing imported water from the Sacramento-San Joaquin Delta have contributed to stress water levels in Southern California, according to the report.

The grand jury’s findings asked for more water conservation and said conservation pricing, or tiered pricing, was a fair and effective means to motivate conservation.

“We want to price water cost-effectively and fairly, but if water becomes a resource that is no longer readily available, we should reward people who use water wisely,” Myrter said. “And if people don’t choose to use water wisely, there is an incentive to improve their behaviors through lowering cost.”

Myrter has helped prepare a letter in response to the grand jury that will be presented at Tuesday’s City Council meeting.

Water agencies focus the bulk of their conservation efforts on residential water usage, as the majority of use comes from outside residential homes — about 60% is the industry standard, Myrter said. The most common culprit of water waste is when residents overwater their lawns, he said. Water agencies and cities address a number of conservation issues through education and awareness, but that may not be enough.

The city has commissioned studies to determine the cost of implementing a price tiering system — which could be expensive due to the computer system needed — and is evaluating the 26,300 accounts in Newport Beach to determine what an appropriate allocation would be for each customer. Those studies are expected to be completed by the end of the year.

“While we certainly support measures to conserve water, as evidenced by promoting high-tech weather-based irrigation systems, at the same time, we must be careful to ensure that Newport Beach maintains its traditional rights to water use,” Councilwoman Leslie Daigle wrote in an e-mail to the Daily Pilot.

In any circumstance where lifestyle changes may be enforced, some residents may not agree with their allocation amounts. For every building or home with 100 cubic feet of water use, the Newport Beach rate is $2.08, under the uniformed commodity rate system. If a price tier was implemented, those who remained within their allocated amount would likely pay less than that, Myrter said.

“What is most important about a water rate structure is that it’s fair and equitable,” Daigle said. “It’s politically correct to conserve water, but it could result in a practical problem down the line. If the [Municipal Water District of Orange County] takes the savings from us to add new users and then there’s a shortage in the future, then everyone is usually asked to cut the same percent. If we are down to the bone to begin with, then cutting will be very painful and may not be voluntary.”