national multiple family submetering and allocation billing program ...

Table 6.1 Avoided costs from submetering, utility perspective
Annualized Combined
Water and Sewer
Avoided Cost
Equivalent
PV Avoided
Cost*
Water
Saved
Submeter
Useful
Life †
Value of
Water and
Sewer
Benefits
PV of
Benefits to
Utility ‡
($/acre-ft) ($/kgal) ($) (gal/du/year) (years) ($/year) ($)
$200 $0.61 $3,432 7,957 20 $5 $61
$300 $0.92 $5,148 7,957 20 $7 $91
$400 $1.23 $6,864 7,957 20 $10 $122
$500 $1.53 $8,580 7,957 20 $12 $152
$600 $1.84 $10,295 7,957 20 $15 $183
$700 $2.15 $12,011 7,957 20 $17 $213
$800 $2.46 $13,727 7,957 20 $20 $243
$1,000 $3.07 $17,159 7,957 20 $24 $304
* Assumes discount rate of 5% and a term of 40 years.
† Assumes that AMR submeters will be replaced twice in twenty years.
‡ Assumes discount rate of 5% and the assumed term of the submeter useful life (in this case, 20 years).
PROPERTY OWNER PERSPECTIVE
Perceived Benefits
The increase in water prices has had a pronounced effect on multi-family property
owners, essentially raising the cost of doing business. Traditionally, property owners have paid
the water and wastewater bill with the intention of recovering the costs through monthly rent
payments. However, if water prices rise faster than market rental rates, property owners could
experience an increase in operating costs. Thus, owners can benefit by transferring water costs
directly to the residents. This decreases the overall operational costs for the owner and removes
the uncertainty in estimating monthly water bills.
In most cases, billing separately for water and wastewater will increase the owner’s net
operating income and property value. Despite the initial capital investment, submetering can be
a cost-effective option for owners. In addition, submetering technology has improved so that the
cost for submetering new construction and retrofitting most existing properties is reasonable. In
the case of allocation, there is no capital investment and the payback is immediate. Nevertheless,
before converting to a separate billing system, owners should be aware of the applicable federal,
state, and local regulations.
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