19 Oct Water Demand and Supply – If One Goes Down, Should the Other Go Up? Questioning the Billion Dollar Boondoggle

Water Supply and Demand – Questioning the Billion Dollar Boondoggle

Is it a smart business move to increase supply of a product at the same time you commit to reducing demand for that same product? What if the cost to the owners of the business of increasing supply is over $1 billion (that’s a million dollars times one thousand)? And what if there was no guarantee that the most important raw material for the product would be available? This is precisely what the Austin Water Utility is proposing to its board of directors, the Austin City Council.

The Austin Water Utility is currently proposing a $1.2 billion new water treatment plant while simultaneously claiming to be committed to water conservation, which will reduce demand for what the utility sells – water. At the same time, the Lower Colorado River Authority (LCRA) is considering increased restrictions on water use by its customers, including the City of Austin.

The less water we use, the less revenue the water utility will collect. This simple mathematical fact ought to motivate the water utility to re-think its business model. But instead, the utility is convinced that it needs to spend a total of over $1 billion to increase the system’s water treatment capacity by 50 million gallons a day.

From a strictly economic standpoint, how can the water utility justify putting itself and its owners – the Austin ratepayers – on the hook for over one billion dollars to increase the capacity to sell water it claims it doesn’t want to sell?

Austin City Council Members and staff at the Austin Water Utility all claim that we will increase our conservation efforts. Now, this should be a good thing for ratepayers, because if we use less water, we can delay expensive projects to increase supply of the product, treated water. This keeps money in the ratepayers’ pockets that can be used for basic needs, savings, investments, etc.

High efficiency toilets reduce the amount of water used for flushing toilets. Drip irrigation systems are 50% more efficient than spraying water in the air to get it on grass. Using reclaimed water to irrigate grass directly reduces the amount of drinking water used for irrigation.

These and other conservation and efficiency improvements reduce the amount of water sold by the water utility, thereby decreasing revenues at the same time the utility would have to pay its huge debt incurred to build the new proposed treatment plant.

The water utility plans to borrow $400 million for plant and transmission line construction, which means total debt payments of around $1 billion.

Again, how can the Austin Water Utility justify this contradiction of expanding supply while reducing demand? If you look at their projections of summer water demand, which are the few days of the summer when we use – and waste – the most water, you’ll see that the Water Utility assume a moderate flattening of demand for a few years before demand reverts to a direct correlation with expected population growth in a never-ending increase in “peak” summer water use.

In that case, how committed is the water utility to conservation? To start with, they are assuming that only half of the approved water conservation water savings will take place between now and 2017, using 16 million gallons per day of savings after ten years, rather than the 32 million gallons per day found to be saved through the measures passed in 2007.

The overwhelming majority of Austin Water Utility’s proposed spending is on projects to increase supply, namely “Water Treatment Plant 4.” When you add the water utility’s operating budget and capital improvement project budget, water conservation is less than 2% of the $440 million in Fiscal Year 2009-2010.

But let’s assume that the Water Utility hires a great new director for the water conservation department. (The last one, Sonja Stefaniw, was re-assigned after numerous staff departures and a formal complaint, investigation, and finding of violation of city human resources policy.)

And let’s also assume that we continue to make reductions in our “peak” summer water use (our highest day of water use happened in 2001, despite hotter and drier summers and 100,000 more people being served water by Austin).

If we use less water, the water utility sells less water, and its only option will be to increase water rates indefinitely to pay back the money borrowed to build the plant – a plant that we won’t even need if we are half-way serious about conserving and being more efficient with our water. The water utility already plans to increase single family water rates 10.1% this year, with increases coming for five more years, to begin paying off this enormous debt load.

We have excess water treatment capacity to provide water for over a decade of growth, and our peak summer water use has been going down. The city’s current water system can treat 285 million gallons a day, with another 160 million gallons of storage capacity around town. This summer, one of the hottest and driest ever, we used 228 million gallons on exactly one day. The next highest day’s use was 220 million gallons. Most days were between 185 and 210 million gallons.

Again, if we are serious about conservation, the “peak” use of water, the days in the summer when we use the most water, should go down in the years to come, even as we add population. At a minimum, we can reduce our peak summer use each summer.

What sense does it make to increase the system’s treatment capacity from 285 million gallons a day to 335 million gallons a day when we can reasonably expect to reduce our peak summer demand to under 200 million gallons a day and keep it there for years to come?

LCRA sent out a press release in September stating that the drought is not over and that they think we’re in a drought as bad as the “drought of record” of the 1950s, based on lower inflows of water into the Highland Lakes. This drought is only two years on, whereas the “drought of record” lasted about ten years.

Nick Barbaro, publisher of the Austin Chronicle, recently wrote, “We can increase our water treatment capacity – we can double it, as AWU wants to do – but there isn’t going to be that much water available to treat. That’s the cause of the current water restrictions: not treatment capacity, but resource shortage.”
http://www.austinchronicle.com/gyrobase/Issue/column?oid=oid:877722

Mayor Lee Leffingwell and Council Member Mike Martinez are very supportive of moving forward with the billion dollar boondoggle. The other five Council Members will determine if we saddle ratepayers with higher water rates for everyone for the foreseeable future and put ourselves in a position where water conservation runs directly afoul of the water utility’s need to collect more revenue.

Their next test will be this Thursday, October 22nd, when the water utility will seek millions in our money to start scraping some land in preparation for their big digs through miles of karst limestone of the Northern Edwards and Trinity aquifers.

Come speak out at City Hall! This is OUR opportunity to speak directly to our elected Council Members who are supposed to be working on behalf of all Austinites, not just the contractors and engineers lined up to make hundreds millions of dollars.

Learn more at http://savewatersavemoney.org.