The answer to the conservation-versus-stability-versus-equity trilemma in water rate design might be a return to an old-fashioned rate structure with a new-fangled twist: fixed monthly rates tailored to reflect the individual customer’s usage pattern. By adopting cost-of-service fixed rates for each customer rather than for classes of customers, utilities can achieve greater customer equity, enjoy a stable revenue base, and send accurate economic signals to promote conservation.
Although they were once thought impracticable because of technological constraints, water rates crafted to reflect individual customers’ demand characteristics are now not only possible, but desirable.
Teodoro, Manuel P. 2002. “Tailored Rates,” Journal AWWA 94(10): 54-64.