Essential Household Water Use Within Conservation Policy

Having established that conservation-oriented rates use price signals to influence higher levels of consumption, an important question remains: What kinds of residential water use are those signals intended to affect? The answer is not simply 'all additional water.' Different uses serve different household functions and present different opportunities for conservation.

Basic indoor water needs include activities central to health, sanitation, and ordinary living, such as drinking, food preparation, cooking, bathing, personal hygiene, toilet use, laundry, and routine cleaning. The amount required for these functions varies among households and can be influenced by fixtures, behavior, age of housing, medical or other circumstances, and the number of residents sharing the home.

Conservation remains relevant to these basic functions. Efficient toilets, showerheads, clothes washers, leak repair, shorter showers, and other practices can reduce the amount of water required without eliminating the underlying activity. Conservation policy should therefore encourage households to perform basic activities efficiently rather than treating basic indoor use as exempt from efficiency expectations.

Other residential uses can present greater opportunities for discretionary reduction. Seasonal landscape irrigation, ornamental watering, avoidable leaks, and other higher or less essential uses may often be reduced without affecting basic household health or sanitation. The precise line is not identical for every household or every gallon, so the report does not treat 'indoor' as automatically essential or 'outdoor' as automatically wasteful.

The useful regulatory distinction is therefore functional rather than absolute. Conservation pricing seeks to create stronger incentives where customers have greater practical ability to reduce consumption, while reliable water service must continue to support ordinary household needs. Rate design works best when it does not assume that total meter volume alone perfectly identifies where that line falls.

Government and industry research commonly separate indoor household demand from seasonal or outdoor demand when studying residential use. Water Research Foundation studies and EPA WaterSense materials document recurring indoor end uses and the role of fixture efficiency, while New York utility studies have used winter or non-peak periods to approximate indoor demand more closely.¹⁷

For purposes of this report, 'occupancy-driven indoor demand' is a technical shorthand for the additional aggregate indoor demand that can result when more residents perform basic household activities behind one meter. The phrase does not imply that every gallon used by a larger household is essential, nor does it assume that larger households are inherently efficient. It identifies household occupancy as one documented cause of higher indoor volume that is analytically distinct from discretionary use or waste.

Households of every size remain capable of—and responsible for—using water efficiently. A smaller household can use water inefficiently; a larger household can use water efficiently; and both can experience leaks, inefficient fixtures, or discretionary use. Conservation education, rebates, leak reduction, and efficient appliances therefore remain relevant across household sizes. An occupancy adjustment, if adopted, would supplement those efforts rather than replace them.

This distinction also clarifies the role of the initial rate block. Inclining block structures generally apply stronger price signals as total use increases, and an initial block may be intended to encompass a level of ordinary residential demand. But the existence of that design objective does not establish that the standard first block contains all basic indoor demand for households with materially different occupancies. Whether the threshold performs that function equitably is a separate rate-design question.

New York's Veolia proceeding illustrates the conservation purpose of the higher blocks. The Commission described the inclining rates as designed to discourage discretionary usage, particularly in summer, and the highest residential block has been described in the regulatory record as approximating discretionary seasonal use. That purpose makes it relevant to ask whether some basic indoor demand can nevertheless enter higher blocks under actual customer conditions.

Liberty's Threshold Analysis pursued that question directly at its highest residential tier by examining non-peak usage, household-size estimates, and customer occurrences. The study found a possible larger-household effect and said the impact warranted further study. Liberty later testified that the company and Department of Public Service Staff determined in summer 2025 that further study was not required at that time. Liberty's 2026 testimony also stated that the company lacked sufficient data to support a different conservation rate design. Those statements do not establish that occupancy is irrelevant; they underscore that the policy question should be resolved on an adequate utility-specific record rather than by assumption.¹⁸

The next chapter turns to that New York record in detail. It reconstructs how the Rockland SUEZ/Veolia residential blocks were developed, how household-size concerns entered the proceeding, what the Commission decided, what the 2019 service-classification study actually examined, and how the structure continued into later rate plans.