The stock market goes up and down. Gasoline prices go up and down. So does the cost of computers and groceries. But the price of Denver water only goes up. For 22 years in a row.
And with it, the price in many Denver suburbs, which the city supplies — at a healthy markup.
But the Denver Water Board, like water providers all over the nation, doesn’t rely on pricing structure alone to handle supply and demand.
Being a government monopoly, it can’t help but mix in various restrictions on customer behavior, violations of which are punishable by law. That’s what governments do.
Because of a continuing drought and low snowpack in the mountains, restrictions are going to be even tighter this spring and summer. Next week the Denver Water Board is expected to approve staff recommendations that lawn watering be limited to two days a week.
On April 1 the Aurora City Council is expected to do the same thing. In recent years Aurora’s watering limit was three days a week — and they were days of the customer’s choosing. But this year Aurora and Denver are likely to establish what two days you can water: Odd-numbered single-family homes on Wednesday and Saturday, even-numbered ones on Thursday and Sunday; multi-family structures and commercial establishments on Tuesday and Friday.
Aurora charges more for water than Denver does, having gotten a later start on water rights, but it hasn’t raised rates since 2010. Is that because Aurora’s rates are ultimately determined by its city council, which has to stand for re-election? The five Denver water commissioners are appointed by the mayor and suffer no political consequences for their rate votes.
Of course the permanent ban on watering between 10 a.m. and 6 p.m., even on your authorized day, will continue. It’s a sensible rule, what with heat and evaporation, but need it be enforced with penalties? The hours might not be a problem for those with automated sprinkler systems, but they could be for hose-draggers working odd shifts.
What galls many Denver Water customers is the fact that its monopoly pricing doesn’t follow the general rule of supply and demand. If you conserve water, as the department urges, you are reducing demand, and prices should fall. Prices fall at the gasoline pump when driving is down. But after particularly strict watering seasons, Denver Water regularly complains that revenues are down and therefore it must raise prices to meet the shortfall. It is unable or unwilling to adjust capital spending and employment, as the oil companies and other firms competing in the marketplace must do.
Another peculiar fact of monopoly water pricing: Instead of getting volume discounts, you pay in ascending block rates. The more water you use, the more you pay per gallon.
Compounding water’s peculiar economics is the tendency of cities to grant rebates to customers for using efficient appliances. Denver, for instance, is offering $100 rebates for customers who buy a certain type of efficient clothes washer, and $75 rebates for specific low-flow toilets.
These programs cut into revenues, and the department justifies raising rates to cover the cost. In other words, everybody has to pay a little more so relatively few can take advantage of rebate programs.
Are such programs even necessary? Shouldn’t buying a more efficient appliance be its own reward? By giving rebates, cities are paying out money in order to bring in less money.
Establishing fines for the misuse of water also has an antisocial effect. If you don’t like your neighbor much anyway, and you see his sprinkler water flooding the sidewalk on the wrong day of the week, it’s very tempting to call the water authorities.
Thus restrictions not only play havoc with your working and social life, they pit neighbor against neighbor. If pricing alone determined water use, you wouldn’t care when or how your neighbor sprinkled; at least he has to pay for it all. You would only get mad when you see city government sprinkling in the rain.
Amazingly, Denver only began treating water as an economic good in recent decades. It wasn’t until the late 1980s that Denver finished installing meters on homes. Before meters, homes were charged a flat rate, no matter how much water each used.
Whats more, Denver billed bimonthly until 2009, when it finally shifted to a more rational monthly system. Since it has learned flexibility in billing, why can’t it be more flexible in setting prices as well? Why set a year’s rate months in advance? Why not adjust it regularly according to rainfall and snowfall?
Aurora Water is able to communicate with customers on its Web site in — I’m not making this up — 66 languages. Click a button and you can get instant translation into anything from Afrikaans to Yiddish. If it’s that versatile, it too could be a more flexible price-setter.
There’s no reason why city water departments can’t be more like real companies. Why, they could even promote their product instead of discouraging its use. Nothing says “monopoly” like an outfit that keeps raising prices while urging you to use less of its product instead of more.
Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for CompleteColorado.com. Contact him at email@example.com You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.CompleteColorado.com