national multiple family submetering and allocation billing program ...

FOREWORD
As water utilities pursue options for new supplies, one option involves capturing savings
from water conservation programs. This process also includes continually searching for
additional water conservation opportunities through new measures and new technologies.
Beneficiaries of improved efficiencies and cost-effective savings include water and wastewater
utilities, the utility customer, and the environment.
One potential source of water savings is in the multi-family sector where utilities
typically bill the owner through one master meter and the residents pay for their water and
wastewater as part of the monthly rent. Embedded in this paradigm is little or no incentive for
the end user, the resident, to save water because there is no direct pricing signal since water is
paid for in the rent.
As water and wastewater costs increase faster than the rate of inflation, multi-family
dwelling owners are seeking to shift these uncontrolled costs directly to the resident instead of
including them as part of the rent. Owners are using two basic methods to bill residents. One
method involves billing for actual consumption via metering. The second method involves
billing based upon an allocation formula, such as the number of people, number of bedrooms,
square footage, etc. However, the allocation method does not appear to provide an incentive for
residents to save water because the pricing signal is diluted since the charge is based upon a predetermined
formula and not on actual use. One of the primary objectives of this study was to
investigate the savings potential if multi-family residents are billed for their use either through
actual metering or some type of allocation formula.
Nationally, up to 4% of multi-family residents may now metered and charged for their
consumption based upon actual volume of use. Another 9% pay for their water through various
allocation formulas and about 2% are billed through a combination of metering and allocation
programs. That leaves about 85% of multi-family residents still paying for their water and
wastewater as part of their rent, often referred to as “in-rent”. Because the water use of around
60 million people, 20-25% of all residents, could be reduced, there is a great deal of interest in
the potential water savings, the cost and benefits involved in capturing savings, and the
administrative issues associated with separate billing programs. While some utilities are metering
individual multi-family dwelling units, most are not. And while still other utilities have
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