national multiple family submetering and allocation billing program ...

The price elasticity of water demand is a matter for empirical investigation. Virtually all
studies show that water usage does respond to price signals. The empirical estimates of elasticity
depend on all the factors mentioned above.
METERING AND ALLOCATION
Before the advent of metering, water utilities collected revenue through property taxes or
later, a flat fee. Even when metering became possible, many utilities chose to charge a uniform
rate because of its simplicity (AWWA 2000). However, as demand for water increased,
charging on a per-unit basis was recognized as the favored method for encouraging conservation
and efficiency. Several studies were conducted to determine how metering affected municipal
water use. Porges (1957) examined national data from 1,474 municipal water systems and
concluded that 100% metering would reduce per capita water use by over 25%. In Boulder,
Colorado, per capita consumption dropped about 40 percent over the period from 1960, when
Boulder was only 5 percent metered, to 1965 when it was fully metered (Hanke and Flack 1968).
Moreover, Boulder’s water use stabilized at the lower levels; a study showed that consumers did
not return to their old use patterns four or five years after meters were installed (Hanke 1970).
Flechas (1980) compared Denver, Colorado, water customers and reported that a 47% water
reduction would have been achieved for flat rate users if they were metered in 1976. These
studies helped to make residential metering the standard practice it is today.
Although individual metering has become the accepted norm in single-family housing,
multi-family housing is typically built with one master meter for all units. Traditionally,
property owners have paid the water utility bill and recovered the costs through monthly rent
payments. In recent years as water and wastewater costs have risen, multi-family dwelling
owners have sought to remove these costs from the rent to improve their net operating income by
shifting water costs directly to residents. A similar shift occurred in the electric industry during
the 1970s when prices rose. The savings associated with these cost shifts remains a topic of
ongoing research.
Electric Industry
The energy crisis that occurred in the 1970s forced Americans to take stock of their
energy consumption. President Carter issued Executive Order 12003, which addressed the issue
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