Cost Plus

Abstract

This article tests the importance of cost, demand, institutional, and geographic factors on the bills that consumers pay for water and sewer service in North Carolina and the pricing signals that utilities send to customers. The authors apply spatial regression models to test whether other factors besides costs drive rate-setting practices. Results indicate that cost factors, operating ratio, temperature, the application of “outside” rates, and utilities' primary importance on affordable rates affect combined water and sewer bills at average levels of residential consumption. The study also finds that bills are significantly and positively correlated to bills paid in nearby utilities. Community income and the percent of customers below the poverty line are weakly associated with combined bills. However, utilities facing higher growth rates and those that value conservation are no more likely to send stronger pricing signals than others.

Keep your head above water: Explaining disparities in local drinking water bills

“…Notably, they find that water systems' bills are significantly and positively correlated with bill amounts charged by other nearby systems. Chica-Olmo, Gonza ´lez-Go ´mez and Guardiola (2013) take a similar study approach in Southern Spain and find similar results (2009) [1,2]. This finding is somewhat intuitive; one might expect relative parity in price levels for an essential service such as drinking water, as is supported for other household staple goods and services.…”

“…Comparisons using these geographic units allow us to account for potential similarities in regulatory environment, climate, water source availability, and other factors that influence bill amounts. To our knowledge, only one previous study, Thorsten, Eskaf and Hughes (2009), takes a similar data collection approach with a near census of systems with available billing data across one entire state in the U.S [1]. Notably, they find that water systems' bills are significantly and positively correlated with bill amounts charged by other nearby systems.…”

“…Given the lack of readily available water quality data from state-level databases, we queried the U.S. EPA's publicly-available SDWIS search function by state [21]. We then use the system names provided in the EFC database to identify and scrape data system by system [1,8]. We only consider and scrape violation records data between the years of 2009 and 2020.…”

A global survey of urban water tariffs: are they sustainable, efficient and fair?

“…Martinez-Espiñeira, García-Valiñas, and González-Gómez (2009), Ruester and Zschille (2010), and Thorsten, Eskaf, and Hughes (2009) explore the factors determining water tariffs in great detail.…”

Percent Change as a Measure of Price Escalation in Water and Energy Utilities

“…Utility managers must balance multiple and competing objectives when designing energy or water tariffs. These competing goals may include economic efficiency, cost recovery, revenue generation, resource conservation, and the equitable treatment of users (Barberán & Arbués, 2009; Dinar, 2000; Thorsten, Eskaf, & Hughes, 2009). When balancing trade-offs, utility managers may turn to various metrics to help them assess if a particular rate structure meets its objective (Honey-Rosés & Pareja, 2018).…”