A very wet bargain

Albuquerque's water rates are among cheapest in the state, yet the local water authority has no immediate plans to adjust the price.

ALBUQUERQUE -- Albuquerque has a lot of water conservation to do in the next few years, and it's not just so city residents can feel better about themselves. Deadlines are looming that, if missed, could cost area residents and businesses millions of dollars.

Toilet rebates, educational campaigns and financial incentives have reduced water use, but the Albuquerque Bernalillo County Water Utility Authority has shown little interest in another conservation method that has worked in Santa Fe, Alamogordo and other arid communities. Those cities' message to water customers is simple: The more you use, the more you pay.

"You hit 'em where it hurts — in the wallet," said Armando Ortega, customer service manager in Alamogordo, which has among the highest water rates in the state. Since adopting a conservation-oriented rate structure in 2003, Alamogordo's water use has dropped by 40 percent, he said.

But in Albuquerque, where water conservation has slowed to a crawl in recent years, there appears to be little interest in hiking water rates to discourage profligate use. Though the rate structure is up for review and approval Aug. 20, water authority spokesman David Morris said, "There are no plans at this point to revise it."

The numbers game

The water authority recently reviewed its water rates, and a more conservative rate structure was considered but rejected — even as examples of extreme consumption abound. The average city household uses about 100,000 gallons a year, but The Albuquerque Journal reported last week that six residential users in 2007 used around 1 million gallons each. The top user's bill: 1.4 million gallons, according to water authority officials.

Sixth on the list was water authority board member Tim Cummins. He ran through 950,000 gallons of water in his Northeast Heights home last year and never paid a penalty, the Journal reported. "Cummins said he knew he was having problems when at least one of his bills reached over $400 for a month. 'I just didn't realize the scope of the water usage,' " he told the paper.

Cummins said he fixed three separate leaks, but his water use continued to rise, water authority records show. In January alone he used almost 195,000 gallons — nearly twice as much as the average Albuquerque residence uses in a year. Records show he was billed $483.50. The water itself cost $304, at $1.64 per 1,000 gallons.

In Farmington, that much water would have cost $645. In Alamogordo, a whopping $1,600. In Santa Fe, that single month would have cost Cummins more than $2,750.

"If a person has water leak in Alamogordo," Ortega said, "they don't waste any time getting it fixed," just because the bills are so high.

The same is true in Farmington, said Ruben Salcido, the city's water operations and maintenance manager. "The more you use, the more your rate goes up," he said. "It's built-in conservation."

Both cities have what is known as an increasing block rate structure — which roughly means the more water you use, the higher the price per gallon. It's become popular throughout the Southwest, according to a 2006 report by Western Resource Advocates:

We found a close correlation between cities with dramatically increasing block rates and those with the lowest per capita consumption levels. Along with other conservation and efficiency programs, effective rate structures can help stretch existing water supplies farther and avoid much of the cost, delay, and controversy that result from large, new water development projects.

How things work

It works like this: All users in a given class pay the same amount for the first block of water every month. The utility can set the amount of water and the price as it wants. In Farmington, for example, the first block is 7,000 gallons and costs $1.54 per 1,000 gallons. Another city might offer more water or less, and adjust the cost to fit the community.

Farmington customers who use more than 7,000 gallons rise into the second tier, and pay slightly more — $1.93 — per 1,000 gallons up to 20,000 gallons. In the next block the charge rises to $2.41 per 1,000 gallons, and finally to $3.62 per 1,000 gallons for those who use more than 40,000 gallons a month, Salcido said.

It's a fair system, he said. "If they're willing to pay, they can have all the water they want," Salcido said. And those who conserve — like Salcido himself, he said — aren't subsidizing their neighbors' lawns or duck ponds. "I reduced my (lawn) sprinkler use so I stay out of that next tier," he said.

Some cities have a uniform rate structure, and charge the same rate for water regardless how much is used. That was Farmington's system until 2006. Roswell has two rates — $8.25 for the first 3,000 gallons and $1 for every 1,000 gallons afterward, according to the city's Web site.

Santa Fe also has two rates, but its conservation ethic puts even Alamogordo to shame. From September through April, the City Different charges $4.09 per 1,000 gallons for the first 7,000 gallons, and $14.64 per 1,000 gallons after that. In the summer, the cost per gallon is the same, but the second tier doesn't kick in until the customer uses 10,000 gallons.

Hybrid, but not exactly a Prius

The Albuquerque water authority has yet another type of rate structure that's a mix. It has some conservation elements that "send a price signal" to customers as their water use rises, said Stan Allred, the authority's finance director. But it doesn't set rates so high that it slams consumers into conservation. As authority Conservation Officer Katherine Yuhas said, "This isn't as affluent a community as Santa Fe," and the water rates reflect that.

From November through March, the water authority charges $1.64 per 1,000 gallons, regardless how much water is used. From April through October, the price depends on how much is used during the previous winter. When the summer use is more than three times the winter use, there's a penalty, albeit slight: the cost per 1,000 gallons rises to $2.83. If use is four times higher, the customer pays $3.82 per 1,000 gallons. That's one of the "price signals" Allred referred to that aims to boost conservation.

But for customers like Cummins, whose winter use last year was well over 100,000 gallons a month, the penalty never kicks in because their summer use never rises to three times the winter use.

Another price signal to reduce water demand is the sewer charge. A customer's year-round sewer charge depends on how much water they use in the winter, Allred explained. A person who intentionally uses more water during the winter in order to avoid the summer surplus charges actually ends up paying slightly more all year, he said, because of higher sewer charges.

Yuhas, whose job aims to reduce water use even as the city keeps growing, said she supports raising the current rates to spur conservation, though not as high as those in Santa Fe. The current rate structure may have incentives to reduce use, but they should be more visible to the average rate payer, she said.

"We've reached a situation where we have to reach people who haven't gotten the message" to conserve, she said. "Having a rate structure that was more straightforward and clear in encouraging conservation would be helpful."

What about the future?

The water authority hired Red Oak Consulting to review the current water rate structure earlier this year. In a presentation to the authority's Citizen Advisory Committee in June, Red Oak recommended to maintain the current rate structure. Allred said the authority is scheduled to review the rates again in 2010.

In a statement through a spokesman, water authority Executive Director Mark Sanchez said late last week there were no plans to change the rate structure "at this point."

Several calls by the Independent to water authority board Chairwoman Deanna Archuleta late last week to ask about the water rate structure were not returned. But she suggested to the Journal last week that the board may be ready to revise rates. "There needs to be a severe penalty for those who consistently have high use," she told the paper.

The water authority suggested as much in its own long-range management plan, the Water Resources Management Strategy, which was approved last October. Among the recommendations:

The Authority should continue increasing water rates and implementing steeply increasing block rates to encourage water conservation, including a very low rate for low water use customers and increasing to very high rates for large water users. Surcharges for excess use could vary by customer class, targeting water classes that have not achieved water conservation goals.

Residential use accounts for about half the water used in Albuquerque. Residents have actually reduced their water use more than commercial, industrial and institutional users, Yuhas said.

But the authority's conservation effort still has a ways to go to meet its conservation targets, she said. The average residence today uses about 100,000 gallons a year, and homes with large, green yards use even more — 120,000 to 140,000 gallons, she said. By 2014, the water authority's goal is an average of 80,000 gallons per household.

The real deadline comes 10 years after that, in 2024, when the authority must be at about the 80,000-gallon average or else be in violation of its state permit to use San Juan-Chama Project water. It's not likely the state could actually turn off the tap. But if history is a gauge, such a violation could be costly. When New Mexico failed to meet its obligation to Texas for water from the Pecos River, the state ended up paying at least $75 million in penalties, wells and water rights.

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