Chris Loomis - Presented at TWCA Mid Year Conference - June 13, 2014

1. Revenue Stability
Through Rate Design
June 13, 2014
Chris Loomis Environmental & Water Conservation Manager
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2. Addressing the Water
Conservation Conundrum
• Currently the City of Conroe has a high ratio
of variable water revenue to fixed revenue.
• The city has experienced in past years a drop
in sales volume due to drought, wet weather
and conservation.
• Increasing the variable portion of the water
rates would increase revenue vulnerability.
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3. City of Conroe Rate Design
Committee Goals
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• Develop a rate structure that supports
water and sewer system expenses and also
meets current financial, political and social
goals.
• The new rate structure must take into
consideration that water conservation may
end up raising rates.
• It’s important to have a higher ratio of fixed
revenue.

4. Rate Considerations
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• The City of Conroe has a set fixed and
variable cost that need to be recovered.
• High water conservation rates run the risk
that higher users will use less water in a wet
season.
• Should high users subsidize low users.
• Too high of water rates will elicit a behavioral
response that will drop sales volume.

5. Average Per Capita Demands
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6. The City of Conroe uses
Inclining Block Rates
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Pro’s
• Sends a strong pricing signal.
• Discourages usage.
Con’s
• Discourages usage.
• Weather sensitive.
• Can be politically unpopular.

7. Conroe’s Current Water Meter Rates
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8. Conroe’s Current Water Rates
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9. Water Rate Recommendations
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• Future price increases will go to the base
rate to increase fixed revenue.
• Consider a surcharge for Stage 3 Drought
Contingency.
• Increase water meter rates to reflect the
rate of similar cities.
• Consider a 4 tier rate structure instead of
the current 6 tier rate structure.

10. Tracking the Static Water Levels of
the Jasper Aquifer
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11. Tracking the Static Water Levels of
the Jasper Aquifer
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12. Questions?
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