Research

Executive Summary

Water conservation is an established objective of modern water utility regulation. In New York, the Public Service Commission has approved conservation-oriented residential rate structures while utilities also use customer education, efficiency programs, leak reduction, rebates, and public outreach to encourage responsible water use. Inclining block, or tiered, residential rates are one tool within that broader framework: higher levels of consumption are billed at progressively higher prices to strengthen the conservation signal. Rate design, however, also operates within the Commission's broader responsibility to establish just and reasonable rates and to consider customer impacts.¹

Residential households differ in ways that materially affect basic indoor water needs. Some consist of one resident, while others include children, grandparents, multiple generations, or unrelated adults sharing one home. As the number of residents increases, total indoor demand can rise because more people rely on the same meter for drinking, cooking, bathing, sanitation, laundry, and other daily needs. A common meter-level starting block is simple to administer, but it can affect households differently when occupancy differs. This creates a rate-equity question within conservation-oriented design: whether the starting allocation reasonably distinguishes basic indoor water needs associated with household occupancy from higher use that conservation pricing is principally intended to discourage.

The relevant rate-design variable examined here is household occupancy. Any adjustment would apply under the same neutral eligibility rules to every qualifying household within the applicable class, without regard to neighborhood, income, family structure, religion, ethnicity, or community identity.

New York's own regulatory history shows that this question is not new. When SUEZ Water New York proposed the current three-block single-family residential structure in 2016, its rate witness described the first 5 CCF per month as an amount intended to include the basic needs of an average family and exclude discretionary outdoor use. Black & Veatch tied the first-block design to an approximately three-person Rockland reference household, explained that the second tier 'recognizes the variability in household sizes,' was intended to accommodate most single-family households most of the time, and stated that third-tier usage should generally reflect discretionary use. It also stated that no single conservation rate structure would work for all households. Rockland County's consultants warned that larger households could exceed 5 CCF even during winter, and SUEZ's rate witness later acknowledged that an inclining-block structure can place a large family's basic-needs usage into the second and third blocks.²

The Commission nevertheless adopted the conservation-oriented structure after describing the rate design as a purposeful balancing of conservation, customer type, the type of use affected, and administrative practicalities. It also required a later service-classification study. That study was filed in 2019 and examined multi-family classifications and building-size effects, but it did not directly test whether the single-family 5- and 12-CCF thresholds fairly accommodate basic indoor demand across different household occupancies. The Rockland single-family thresholds were continued in the 2019–2020 rate proceeding and remain in the current Veolia New York Rate District tariff, while master-metered multi-family customers remain subject to materially different block sizes and rate progression.³

More recent New York evidence reinforces the need for careful, customer-specific analysis. Liberty Utilities' 2024 Threshold Analysis examined non-peak Tier 4 usage, found a possible relationship between repeated high-tier occurrences and larger household size, and concluded that the impact on larger households needed further study. Liberty later testified in its 2026 rate filing that the company and Department of Public Service Staff met in summer 2025 and jointly determined that further study was not required at that time; Liberty also stated that it was not proposing a rate-design change because it did not have sufficient data to support one. Read together, those developments do not resolve the occupancy question. They show both the value of examining indoor use and the continuing importance of developing an adequate factual record.⁴

This report also reviews comparable utility programs demonstrating that conservation pricing and household-occupancy adjustments can operate together. Utilities including Irvine Ranch Water District, Las Virgenes Municipal Water District, and the City of Boulder use application, review, verification, renewal, or privacy procedures while continuing to apply higher conservation prices beyond an adjusted baseline or water budget. These programs are not legal precedent for New York and do not establish the correct New York formula, eligibility threshold, cost, or documentation standard. Their value is narrower: they demonstrate that occupancy-based adjustments are operational rather than merely theoretical.⁵

Taken together, the evidence supports a focused conclusion. Conservation and rate equity are not mutually exclusive objectives. An optional household-occupancy adjustment can be structured so that every household continues to pay for all water used and higher conservation prices continue above the adjusted starting allocation. The relevant question is whether a verified adjustment can better account for documented basic indoor water needs associated with household occupancy while preserving effective conservation incentives, fair revenue recovery, reasonable customer impacts, privacy, and program integrity. The available evidence supports moving that question toward practical regulatory consideration rather than leaving it as an abstract concern.

Accordingly, this revised report recommends that the New York State Public Service Commission evaluate and, if supported by the record, develop a workable optional, verified household-occupancy adjustment to the starting residential allocation for Veolia Water New York's applicable separately metered residential class. A participating household would continue to pay for every unit of water used, and higher conservation prices would continue after the adjusted allocation is exceeded. This report does not prescribe a fixed gallons-per-person formula, household-size cutoff, tariff provision, or verification rule. Those details should be developed through the Commission's established regulatory process using Veolia-specific evidence. Any broader application would require a separate utility-specific record.

¹ New York State Public Service Commission, Order Adopting Joint Proposal as Modified and Establishing Rate Plan, Case 23-W-0111 (issued May 16, 2024); Joint Proposal, § XVIII, 'Conservation & Efficiency Program,' Case 23-W-0111 (dated January 4, 2024); New York State Department of Environmental Conservation, 'Water Use & Conservation'; U.S. Environmental Protection Agency, WaterSense, 'Statistics and Facts.' Return to text

² Paul R. Herbert, Direct Testimony, SUEZ Water New York Inc., Case 16-W-0130, at 12-13; Black & Veatch, SUEZ Water New York Inc. Water Conservation Plan, Case 16-W-0130, Exhibit SCPP-2, at 43 and 79; Direct Testimony of Amawalk Consulting Group LLC on behalf of the County of Rockland, Case 16-W-0130, at 8-9; Paul R. Herbert, Rebuttal Testimony, Case 16-W-0130, at 11. Return to text

³ New York State Public Service Commission, Order Establishing Rate Plan, Case 16-W-0130 (issued January 24, 2017), including the Commission's discussion of rate-design balancing and the required service-classification study; Black & Veatch, Performance of a Comprehensive Service Classification Study, SUEZ Water New York (filed January 31, 2019 in Case 16-W-0130); Paul R. Herbert, Direct Testimony, SUEZ Water New York, Case 19-W-0168, at 11-13; Joint Proposal and Appendices, Case 19-W-0168, Appendix 9; New York State Public Service Commission, Order Adopting Terms of Joint Proposal, Approving Merger, and Establishing Rate Plan, Case 19-W-0168 et al. (issued July 16, 2020); Veolia Water New York Inc., P.S.C. No. 1 - Water, Service Classification No. 1, New York Rate District, Leaf Nos. 82-83, and Service Classification No. 6, New York Rate District, Leaf Nos. 99-100 (rates effective February 1, 2026). Return to text

⁴ Liberty Utilities (New York Water) Corp., Threshold Analysis Study 2024, Case 23-W-0235 (filed December 27, 2024); Kimberly Dragoo, Direct Testimony, Liberty Utilities (New York Water) Corp. (May 29, 2026), associated with Case 26-W-0358. Return to text

⁵ Irvine Ranch Water District, 'Residential Water Rates,' 'Request a Water Variance,' and Rules and Regulations, §§ 12.7.1-12.7.2 (current materials reviewed August 2026; Rules and Regulations adopted June 9, 2025); Las Virgenes Municipal Water District, 'Water Budgets' and 'Water Budget Adjustment Request' (current materials reviewed August 2026); City of Boulder, 'Water Budgets' and 'Water Budget Adjustment Application' (current materials reviewed August 2026); City of Boulder, Water Resources Advisory Board, Water Budget Policy Overview and Review Process (October 20, 2025), Attachment A: City Manager Rule 11-1-3.A(21), § 6. Return to text

Revision Note

The revised edition incorporates additional primary-source material concerning the development and later review of the SUEZ/Veolia residential rate structure, including records from Cases 16-W-0130 and 19-W-0168, the January 2019 Comprehensive Service Classification Study, subsequent Liberty developments, and current tariff information. These materials strengthen and refine the report's New York-specific analysis, particularly the relationship among conservation, household occupancy, rate equity, service classifications, and administrative practicality. The central recommendation remains focused on a possible optional occupancy adjustment for Veolia's applicable separately metered residential class while preserving conservation; the additional record provides a more complete foundation for that recommendation.

Research Question

The central research question examined throughout this report is:

How should conservation-oriented residential water rates distinguish basic indoor water needs associated with household occupancy from avoidable or discretionary higher use when materially different numbers of residents rely on one meter, and can a neutral, optional, verified household-occupancy adjustment to the starting allocation improve rate equity while preserving conservation objectives, fair revenue recovery, reasonable customer impacts, administrative feasibility, customer privacy, and program integrity?

In this report, 'starting residential water allocation' or 'initial allocation' refers to the amount of residential water use billed within the first applicable usage block or comparable baseline before higher conservation prices apply. The report uses those terms conceptually; actual tariff structures and service classifications differ by utility.

The report does not begin with a predetermined formula or gallon allowance. It examines the rate-equity problem through residential-demand evidence, rate-design principles, New York regulatory history, current tariff structures, and documented implementation experience. Those sources are used to test the concern, define its limits, and evaluate a workable response. The precise allowance, eligibility threshold, tariff language, and verification rules remain matters for utility-specific analysis and Commission review.

Research Findings

The preceding chapters examined conservation policy, residential rate design, New York's regulatory history, household occupancy, comparable utility implementation, administrative feasibility, and competing rate-equity considerations. Based on the evidence reviewed, the following findings are supported.

Finding 1

Water conservation is an established public-policy objective.

New York regulatory proceedings, conservation programs, government guidance, and utility practice consistently recognize efficient water use as an important means of protecting water resources, supporting reliable service, and limiting unnecessary demand. Conservation remains a foundation of residential water-rate design.

Finding 2

Conservation-oriented pricing is an established rate-design tool, but total meter volume does not by itself identify why usage is higher.

Inclining block rates use progressively higher prices to strengthen conservation incentives as consumption rises. Higher total use, however, can reflect outdoor demand, leaks, inefficient fixtures, household occupancy, unusual circumstances, or a combination of factors. The conservation purpose of a higher block therefore does not establish that every unit entering that block is discretionary.

Finding 3

Rate equity and conservation are related, not mutually exclusive, regulatory considerations.

A rate structure must support conservation while also recovering authorized revenues and operating reasonably across customer circumstances. Equal numerical thresholds can produce different effects when the number of residents behind a meter differs materially. This makes the treatment of basic indoor water needs a legitimate rate-design question rather than an argument against conservation.

Finding 4

Household occupancy is a documented factor affecting indoor residential water demand.

New York utility-specific research, Liberty's Threshold Analysis, and broader residential end-use research all identify the number of residents as an important factor in indoor demand. Occupancy is not the only determinant of use, but it is analytically distinct from leaks, discretionary use, and inefficient fixtures. The current record does not quantify how much of Veolia customers' higher-tier use is attributable to occupancy, how many customers experience a material occupancy-related effect, or the resulting dollar impact.

Finding 5

The Rockland residential blocks were developed with household-size variability expressly recognized, while the original record also identified a larger-household limitation.

The 2016 SUEZ record tied the 5-CCF first block to the basic needs of an average household and a roughly three-person Rockland reference. Black & Veatch explained that the second tier recognized variability in household size and was intended to accommodate most single-family households most of the time, while third-tier usage should generally reflect discretionary use. Rockland County's consultants warned that larger households could exceed the first block even in winter, and SUEZ's rate witness acknowledged that an inclining-block structure can place a large household's basic-needs usage into the second and third blocks.

Finding 6

The current Veolia New York Rate District retains the historic 5/12-CCF separately metered residential thresholds while treating master-metered multi-family service under materially different blocks.

The 2019-2020 proceeding continued the SFR structure, and the current tariff retains first 5 CCF, next 7 CCF, and over 12 CCF for the applicable separately metered residential class. Master-metered multi-family service uses first 20 CCF, next 380 CCF, and over 400 CCF, reflecting a different service-class and usage context.

Finding 7

The direction and amount of any revenue shift or cross-subsidy cannot be assumed from bill levels alone.

Historical SUEZ testimony shows that moving customer-related costs between fixed and volumetric charges can change which customers bear those costs, and the witness specifically connected higher volumetric recovery to larger households' basic needs. That history does not establish the direction or amount of any current Veolia cross-subsidy. It does show why the present allocation should not simply be assumed neutral. Current Veolia cost-of-service, billing, usage, and revenue evidence would be required before concluding that either smaller or larger households presently subsidize the other.

Finding 8

New York has examined household-size effects, but the Veolia separately metered residential occupancy-equity question remains unresolved.

The PSC-required 2019 study was a genuine service-classification review, but it focused primarily on multi-family building type and size rather than household occupancy within the separately metered residential class. Liberty's later analysis identified a possible larger-household effect, while subsequent testimony described the issue as not requiring further study at that time and lacking sufficient data for redesign. The record therefore supports further resolution, not a claim that the occupancy question has already been answered.

Finding 9

Comparable utilities demonstrate that occupancy adjustments can coexist with conservation-oriented pricing and ordinary utility administration.

IRWD, LVMWD, and Boulder use water-budget or baseline adjustments that account for resident count while preserving higher conservation prices beyond the adjusted amount. Their procedures also demonstrate practical approaches to application review, verification, renewal, and privacy. These examples establish feasibility, not the required New York formula or cost.

Finding 10

Conservation, rate equity, revenue recovery, customer impacts, verification, privacy, and administrative practicality can be addressed within one rate-design process.

The evidence identifies no inherent requirement to choose one of these objectives at the expense of all others. A final New York design would need to balance them, but documented utility practice and New York's own regulatory history show that they are capable of being considered together.

Finding 11

The evidence supports Commission consideration directed toward a practical optional occupancy adjustment rather than further abstract study alone.

The record does not establish one correct gallons-per-person formula or eligibility threshold. It does, however, provide a sufficient factual and administrative basis for the Commission to determine whether a workable occupancy-adjusted starting allowance should be implemented for Veolia's applicable separately metered residential class and, if supported by the record, to develop that adjustment while preserving conservation.

These findings are evidence-based conclusions rather than a tariff formula. The final chapter states the regulatory action that follows from them while leaving the precise design to the Commission's record.

Recommendation for Commission Consideration

The evidence reviewed in this report supports a specific next step. The New York Public Service Commission should evaluate and, if supported by the record, develop a workable optional household-occupancy adjustment to the starting water allocation for Veolia Water New York customers in the applicable separately metered residential class. The immediate purpose should be to determine whether the current common threshold places material basic indoor water needs into higher conservation tiers because more residents share one meter, and whether an occupancy-adjusted starting allowance would improve rate equity while preserving strong conservation incentives.

The objective should not be merely to study household size in the abstract. The regulatory process should be directed toward an implementable outcome: if the evidence demonstrates that the present starting allowance creates a material occupancy-related rate-design problem and that a reasonable adjustment can be administered, the Commission should establish the adjustment through the appropriate tariff and program rules. If the evidence does not support implementation, the record should explain why.

The adjustment should preserve the basic structure of conservation pricing. Every participating household would continue to pay for every unit of water used. The adjustment would change only the amount of water available at the starting rate before higher conservation prices apply; once the adjusted amount is exceeded, the existing higher-tier framework would continue to provide a conservation signal. Households of every size would remain responsible for efficient water use.

Participation should be voluntary. A household that does not request an adjustment should remain under the standard tariff and should not be required to provide occupancy information for this program. A household that does participate should meet neutral eligibility and reasonable verification requirements that apply on the same terms without regard to neighborhood, income, family structure, religion, ethnicity, or community identity. Privacy, renewal, and program-integrity rules should be proportionate to the information and benefit involved.

The Commission should also ensure fair revenue recovery and consider the effects of any final design on participating and nonparticipating customers. The inquiry should consider both the effects of a proposed adjustment and whether the present structure allocates customer-related costs and conservation price signals reasonably. It should not assume that an adjustment necessarily transfers the cost of larger households to smaller households, or that the existing allocation is neutral. Current cost-of-service, billing, usage, and revenue evidence should determine how the utility's authorized revenue is being recovered and how any revised design would distribute that responsibility.

This report intentionally does not prescribe a gallons-per-person allowance, minimum household size, fixed verification document list, or renewal period. Those details require utility-specific evidence and the judgment of the Commission, Department of Public Service Staff, the utility, consumer representatives, municipalities, conservation advocates, and other parties. The report's guidance is instead substantive: the final design should give qualifying households a reasonable opportunity to meet verified basic indoor water needs before the stronger conservation price signal applies, while retaining conservation, fair revenue recovery, privacy, and practical administration.

This recommendation concerns Veolia's applicable separately metered residential class in the New York Rate District. Any broader application would require a separate utility-specific record and should not be assumed from the Veolia evidence alone.

Accordingly, the report recommends Commission consideration directed toward a practical optional occupancy adjustment for Veolia's applicable separately metered residential class, with implementation if the regulatory record supports it. Such an approach would preserve the conservation principles that remain central to New York water policy while addressing a rate-equity question supported by residential-demand evidence and reinforced, but not resolved, by New York's own regulatory history.

Sources and Citation Note

This report is based primarily upon official regulatory, governmental, and utility sources. The revised edition places particular emphasis on New York Public Service Commission Orders, Joint Proposals, tariff leaves, filed testimony, utility studies, Department of Public Service materials, New York State Department of Environmental Conservation publications, United States Environmental Protection Agency guidance, and other official documents relevant to residential water conservation, rate design, household occupancy, and utility administration.

The revised edition incorporates additional primary records from the development and later review of the SUEZ/Veolia rate structure, including Case 16-W-0130, Case 19-W-0168, the January 2019 Comprehensive Service Classification Study, Case 23-W-0111, Case 23-W-0235, and subsequent Liberty testimony associated with Case 26-W-0358. Current tariff provisions are used where present service classifications or block thresholds are discussed.

Comparative utility examples are included to illustrate documented conservation programs, administrative practices, and implementation approaches. These examples are presented for comparative research purposes only and should not be interpreted as legal precedent, proof of New York-specific cost or revenue effects, or recommendations for automatic adoption of another utility's formula or documentation rules.

Direct quotations are used sparingly where the original language provides particular authority, precision, or regulatory significance. Otherwise, factual statements are presented through accurate paraphrase supported by citations. The report distinguishes Commission findings and directives from Department of Public Service Staff positions, Joint Proposals, utility testimony, consultant studies, party submissions, and WaterRatesNY's own analytical inferences.

Where the evidence identifies a limitation or unresolved question, the report states that limitation rather than treating an inference as an established fact. This distinction is especially important in the discussion of household occupancy, rate equity, revenue allocation, administrative cost, and the scope of prior New York studies.

Supplemental Research — August 2026

Master-Metered Multifamily Rate Equity →

A separate review of the longstanding New York rate-equity issue affecting properties where multiple dwelling units share one master meter.

Research Accuracy and Corrections

This report draws on a broad review of official regulatory, governmental, utility, and industry sources. Care was taken to describe and cite those materials accurately. Minor typographical, citation-location, or source-description errors may nevertheless remain. Documented corrections may be sent to contact@waterratesny.org. WaterRatesNY will verify reported issues and note whether any correction affects a finding or conclusion.