Time of use tariffs: implications for water efficiency

Abstract

Water utilities undertake long term planning for water source security, often with forecast cycles of 20 to 30 years. Whilst this planning is generally involved with investigations of source water abstraction security and the need to build dams or to increase the recharge rate of groundwater aquifers, planning for water efficiency gains occurs at annual intervals. Most water utilities in Australia are heavily engaged in water efficiency initiatives with rebate schemes for domestic water-efficient devices ubiquitous across the industry. Wide Bay Water Corporation (WBWC) also engages in these activities but is increasingly interested in the concept of Time of Use Tariffs (TOUTs) to target high water users in order to reduce their demand on the system. In 2006, WBWC introduced smart metering technology across the city which captures hourly use data. Interrogation of this data has led to the ability to identify water use patterns for every domestic and commercial water customer and to design specific interventions to encourage water efficiency, such as a TOUT for domestic customers. A TOUT has been developed that imposes a penalty on all individual consumption greater than 600 litres in any hourly interval of any day in the year. The tariff was designed to reduce both the annual maximum peak hour demand. The ability to reduce both of these infrastructure design parameters may have the potential to deliver substantial savings in infrastructure planning and deployment. This paper details the design process of this tariff, examines the infrastructure savings potential derived by network modelling and explores the regulatory framework hurdles to be overcome in order to implement such tariffs in the water industry.