Tiered Water Pricing
What is it?
Tiered Water Pricing is the practice of measuring a user’s consumption of water and charging for consumption based on tiered rates. The charge per cubic meter of water increases progressively with each tier, or level of water use, ensuring that the more water used, the more paid for consumption. The lowest rate tier contains the estimated amount of water needed indoors to maintain quality of life, and higher rate tiers would include additional water usages such as irrigation and excessive indoor use. Tiered Water Pricing can be a powerful conservation tool, as the price signals created indicate the value and scarcity of water resources.
How can municipalities use it?
Municipalities can implement a bylaw to use Tiered Water Pricing to encourage efficient use of water, while recouping costs associated with water treatment and delivery. Council can approve changes to the tiers of water volume and associated consumption rates as needed.
What are the advantages?
The many advantages of Tiered Water Pricing include:
Allows municipalities to recover costs of delivering water to high users
Encourages water conservation, which is essential for drought mitigation and climate change resiliency
More water kept in the system contributes to healthy ecosystems
Water rates reflect the value of a scarce resource while allowing basic water use to remain affordable for residents
What should you watch out for?
No tool is a silver bullet. The following should be considered with Tiered Water Pricing:
Community education is necessary to ensure understanding of rate system
Higher-tier rates must be enough to encourage water conservation
Consumption charges and tiers need to be revisited from time to time to ensure rates are still appropriate
Incremental changes implemented by a user may not result in a reduced tier of water consumption
How can it help maintain natural infrastructure?
Tiered Water Pricing helps to maintain the natural infrastructure system by promoting water conservation. Water conservation can ensure water remains in the system, maintaining assets (e.g., native vegetation), functions (e.g., water disbursement), and benefits (e.g., wildfire management).
Town of Cochrane Utilities – Cochrane charges water users a monthly base rate, plus a water consumption rate based on a tiered system to promote water conservation.
Los Angeles Department of Water & Power – Los Angeles water rates use tiered prices based on a consumer’s water consumption to encourage water conservation and recover costs of water delivery to those with high use.
Economic Instruments to Facilitate Stormwater Management on Private Property – Sustainable Technologies Evaluation Program, a partnership between several conservation groups in southern Ontario, created this white paper to explore mechanisms available to incent installation of Low Impact Development (LID) technologies, and includes a section on stormwater management user fees and credits.
Growing Water Smart: The Water-Land Use Nexus – This document provides information and a case study on incentive-based fee program for water conservation.
Town of Okotoks – Okotoks maintains a billing structure for water consumption that includes a base rate, then three tiered rates based on consumption.
City of Chestermere – Chestermere citizens pay a basic water charge, then are charged for consumption on one two rates based on whether they consume more or less than 18 cubic metres.
City of Edmonton – Edmonton citizens pay for water based on three consumption tiers, separated at 10 cubic metres and 35 cubic metres.
Capital Regional District, B.C. – The provision of water services in and around Victoria BC varies by service region (and by delivery method). Many provide tiered water rates, with most charging based on divisions around 38 and/or 105 cubic metres.
Did we miss something?
If you know of a resource that should be on this list - or your municipality has a sample or case that should be here, please let us know!