In Era of Drought, Texas Cities Boost Water Rates

MIDLAND — David Rosen, a self-employed geologist, said he was relieved when he looked at his water bill for April. The drought-stricken city of Midland had just slapped a steep rate increase on heavy water users, and Rosen had avoided a big charge by curtailing his sprinkler use.

“I was watering like crazy in March to beat the price increase,” he said as he sat in his living room on a rare rainy day. Outside, his lawn showed the effects of the cutback, with big yellow patches alongside the green.

Higher prices have a way of grabbing attention, and many communities across Texas are raising rates to pay for new water supplies and to encourage conservation amid concerns that the lingering drought may portend a broader water crisis. Water experts say it is about time Texans placed more value on this irreplaceable natural resource, given the state’s rapid population growth and fickle weather. But raising rates often triggers public resistance in a state that is wary of too much government.

“Every time we have to raise rates, it is a battle,” said Doug Evanson, the chief financial officer with the San Antonio Water System, which in 2010 increased rates by 33 percent on top water users. “It’s not fun.”

Comparing rates is a tricky proposition, not only in Texas but across the United States, because rate structures vary tremendously by city. Utilities also have different ways of recording water-use data, although legislation passed last year in Texas should help standardize reporting. Better information is a priority because municipal water demand in Texas is expected to rise by more than 70 percent by 2060.

What is clear, however, is that water rates in big Texas cities are lower than in most other major metropolitan areas in the country, at least for moderate users. Last year, for example, a household that used 7,500 gallons a month in Dallas — less than the city’s unusually high 10,140-gallon-per-month single-family use last year — would pay just $21.45, according to data collected by the market-analysis group American Water Intelligence (see this interactive graphic). That is barely half the figure for Eastern cities like Philadelphia and Boston, which charge less than Seattle and Portland — places not known for water shortages.

State Rep. Drew Darby, R-San Angelo, noticed the cheap water years ago when he studied water rates and found that Minnesota cities paid far more for water than their West Texas counterparts.

“You say, ‘That doesn’t really make sense. We’re on the edge of the Chihuahuan Desert, and they’re in the Land of 10,000 Lakes,’” Darby said.

Water, unlike oil, is not perceived as having an underlying value, he added.

Cities in the drought-stricken Permian Basin are just now making significant changes to their rate structures.

A year ago, Odessa and Big Spring had “uniform rates,” meaning that the charge per gallon of water (above a base price) did not change even as use increased, a practice that environmentalists say does little to discourage excess use.

Both cities have introduced tiered-rate structures, a common system nowadays, so that rates will rise in incremental blocks as a household’s water use increases.

Snyder, another city in the area, also changed its rate structure, so a 10,000-gallon-per-month customer will now pay nearly $60 per month, versus about $43 a year ago. Utility officials say that water bills are comparable to cellphone or cable bills and generate a disproportionate amount of grumbling.

“We have people come in and say: ‘I’m really struggling to pay my water bill. Just a minute, let me answer my cellphone,’ ” said Evanson of the San Antonio Water System. That attitude, he said, was “frustrating to me as the financial person.”

When cities set out to encourage conservation, environmentalists say a key strategy is to increase rates for the biggest water users, so they water their lawns less. (Lawn watering can account for 50 percent to 80 percent of households’ summertime use, studies say.)

Indeed, several big Texas cities, led by Austin, assess charges to heavy residential water users (22,440 gallons per month and above) that match or exceed the nationwide average for large cities, according to 2010 data from the American Water Works Association.

“People respond to price, and that helps drive water use down,” said Jennifer Walker, a water resources specialist with the Lone Star chapter of the Sierra Club, who argues for affordable rates for low water users and much higher rates for big users.

Midland’s April rate hike targeted big users — so that households using more than 10,000 gallons a month now pay five times as much per gallon as they paid before.

“The thought process was, ‘If we don’t hit them in the pocketbooks, they will not adjust their habits,’ ” said Mayor Wes Perry, who added that he had received a few angry calls but that people had paid attention. The rate increase is temporary, to get through the drought, he said — and next summer, the City Council will work on a new rate structure.

But rates alone are not enough to encourage conservation. Indeed, El Paso and San Antonio — two cities lauded by environmentalists for encouraging residents to save water through incentives for low-flow appliances and other programs — have lower rates for 7,500-gallon-per-month users than Fort Worth or Houston, according to AWI data.

Water restrictions also stimulate savings. When Midland boosted rates in April, it also tightened its rules so that residents could water their lawns only once a week for two hours. So far, the city is meeting its water-saving objectives. Even so, not all users will overhaul their habits. Rosen, like some of his Midland neighbors, has just drilled a well so he can maintain his lawn and trees even if high rates and restrictions remain.

But saving water is not the only aim of adjusting water rate structures. (Indeed, San Antonio officials also say that some of the biggest water users will not respond to price signals.) Conservation can in fact pose a conundrum for utilities, because it reduces their revenues. Officials often point to the need to pay for new water supplies or fix leaky pipes as a reason to raise rates, and the utilities also typically carry large debt loads that require interest payments. The rate increases in many Permian Basin cities will help pay for access to new water supplies, as the lakes those cities draw from remain dangerously low.

With the Texas population projected to leap from 25 million to 46 million by 2060, cities across the state will be seeking new water sources. That means expanding beyond the cheapest and most convenient water sources, like lakes and freshwater aquifers, which are already being tapped, according to William West Jr., the general manager of the Guadalupe-Blanco River Authority. His agency is considering seawater desalination — often considered the costliest form of water production — but he said that other types of projects, like building reservoirs, also carry high costs.

“We’re going to have sticker shock, with or without desalination,” West said. “That’s coming.”

This article was reported and written with help from a media fellowship from the Bill Lane Center for the American West at Stanford University. It is the first in a four-part series on water use in Texas in an age of drought. Part Two is about the push toward desalination.  Part Three is about the rush for reclaimed water. Coming Tuesday: Conservation efforts in the state.