Why does consumer conservation cause higher prices every single time?

The City of Long Beach California has just announced the raising of water prices by 20% beginning this fall. Reason given the conservation efforts in saving water by the citizens of the city have so drastically reduced their income from the sale of water they now need to raise prices to restore the cities income to previous levels. The same thing happened a couple of years ago with natural gas. So if we get charged more for conserving why should people conserve. Also our mayor was one of the three energy company leaders that helped set up deregulation in California and allowed the Enron scam to happen.

Because the utilities have a huge fixed cost infrastructure that needs to be maintained. This take a certain amount of funds. when conservation methods are used, the utilities revenues are decreased, but they still have this enormous outlay of cash they have to make to keep the utilities flowing.

Another way to look it is from a supply and demand perspective. some people will say, well demand has decreased, so therefore price should decrease, but that isn’t really the case.

What in fact has happened is demand has increased and increasing demand caused the conservation initiatives in the first place. If measures were not taken, then demand would have exceeded supply. This is why conservation was required. Everyone needs utilities, but the amount they need varies, and there is certainly a lot of waste.

The utility companies have been rather stupid from a Public Relations perspective. They should have raised prices to control demand initially, and then implemented a conservation strategy in order to reduce households’ monthly bill to previous levels. Then everyone would have been happier.

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THis is not a scam.. or anything else.. and you are generalizing the facts.

The City is raising water prices because 1) Utilities have a very large fixed cost structure that they have to spread across lower water uses and 2) as water becomes scarcer their cost of alternate sources of water is more expensive. I would bet that your cost of water would gone up a lot more if the City’s residents did not conserve as much.

California has had years of drought.. if you do not think that has affected prices and the need for conservation .. think again. We cannot continue to use resources indiscriminately.

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The higher prices remind people of the worth of the resource, and because it affects them in such a direct manner they are encouraged to take measures to conserve and reduce their bill. It’s been effective before, and will have the desired results to some degree this time, too.

It is one tool to help ensure that a growing state population and limited resources will be available to all who need it. Rainfall, snowpack, underground aquifers, SWP, CWP — it’s a complicated situation complicated further by drought and concerns over providing for a reliable longterm water supply for new development. Agriculture in the Central Valley has received cutbacks which will entail a switch to less water-intensive crops.

A few sites from the Metropolitan Water District to help give you some background. I don’t know if they still do water tours, but I took a few about 10 years ago and they were very informative, and I can’t look at an aquaduct or pumping station the same since.

http://www.mwdh2o.com/mwdh2o/pages/yourw…
http://www.mwdh2o.com/index.htm

This entry was posted on Monday, July 28th, 2008 at 12:44 pm and is filed under Environment. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.