Research → Introduction

Introduction

Conservation-Oriented Residential Water Rate Design and Household Occupancy
An Investigative Review of New York's Regulatory Framework

Background

Water is one of society's most essential public resources. Reliable drinking water supports public health, sanitation, fire protection, economic activity, environmental stewardship, and the daily needs of every household. As communities have grown and demands on water systems have increased, governments and water utilities have placed greater emphasis on conserving available water resources while maintaining safe and reliable public service.²

Over the past several decades, water conservation has evolved from an occasional response to drought into a fundamental objective of modern water utility management. Conservation programs now include public education, leak detection, infrastructure improvements, water-efficient technologies, customer outreach, and conservation-oriented residential rate design. Together, these measures seek to encourage efficient water use while protecting both water supplies and the infrastructure required to deliver them.³

Among these conservation tools, residential water rate design has become an increasingly important component of utility regulation. Many water utilities now employ conservation-oriented rate structures that apply progressively higher prices as residential water use increases. These pricing structures are intended to encourage efficient water use while preserving access to water required for ordinary household needs.⁴

At the same time, residential households differ in important ways. Some households are occupied by a single resident, while others include couples, children, grandparents, multiple generations living together, or unrelated adults sharing one residence. As more residents share one household, ordinary household water needs naturally increase because more residents rely upon the same residential water service for drinking, cooking, bathing, sanitation, laundry, and other everyday activities.⁵

These realities give rise to an important regulatory question. If conservation-oriented residential rate structures seek to encourage efficient water use while preserving ordinary household consumption, how should those conservation objectives operate when documented household water demand differs because of the number of residents sharing a single water meter?

This report examines that question within the context of New York's existing regulatory framework.

Purpose of the Report

The purpose of this report is to examine whether conservation-oriented residential water rate design can operate together with an optional adjustment to the initial residential water allocation based on verified household occupancy, administrative feasibility, and customer privacy within the regulatory framework governing New York's investor-owned water utilities.

The report does not argue against water conservation. On the contrary, it begins from the premise that conservation remains an important public policy objective supported by state regulators, government agencies, and water utilities. Nor does the report advocate replacing conservation-oriented residential rate structures with uniform pricing or eliminating higher conservation tiers.

Instead, the report investigates how conservation-oriented residential rate design functions in practice, how household occupancy influences ordinary residential water demand, how comparable utilities have addressed similar issues, and how existing administrative practices support implementation while protecting customer privacy and maintaining program integrity.

Research Question

The central research question examined throughout this report is:

Can conservation-oriented residential water rate design, an optional adjustment to the initial residential water allocation based on verified household occupancy, administrative feasibility, and customer privacy operate together within New York's existing regulatory framework?

In this report, “initial residential water allocation” refers to the amount of residential water use available at the initial rate before higher-priced conservation tiers apply. The shortened term “initial allocation” is used thereafter.

Rather than beginning with a predetermined policy outcome, the report approaches this question through documented evidence gathered from New York regulatory proceedings, government publications, utility policies, industry guidance, and comparable utility implementation.

Scope

This report focuses primarily on the regulation of investor-owned water utilities operating under the jurisdiction of the New York Public Service Commission.

The research examines:

New York Public Service Commission proceedings;
Liberty Utilities (New York Water) Corp.;
Veolia Water New York;
Department of Public Service materials;
New York State Department of Environmental Conservation publications;
United States Environmental Protection Agency guidance;
American Water Works Association publications;
comparable utility programs in other jurisdictions; and
documented administrative practices relating to verification, privacy, and program implementation.

The report does not attempt to recommend a specific occupancy formula, gallon allocation, tariff language, or verification standard. Those implementation details remain matters for utility-specific analysis and consideration through the Public Service Commission's established regulatory process.

Methodology

This report is based primarily upon a review of official regulatory and governmental sources together with documented utility policies and industry guidance.

Research materials include Public Service Commission Orders, Joint Proposals, Department of Public Service documents, government publications, utility conservation policies, administrative procedures, and comparable utility programs. Comparative examples are used to illustrate documented implementation practices and administrative approaches rather than to establish legal precedent for New York.

Throughout the report, New York sources are given primary emphasis. Comparative utilities are examined only after the relevant New York regulatory framework has been established. Direct quotations are used where the original language provides particular authority or precision; otherwise, findings are presented through accurate paraphrase supported by citations to the underlying source material.⁶

Organization of the Report

The report is organized as a sequential investigation.

Chapter 1 establishes water conservation as an important public policy objective.

Chapter 2 examines the purpose and development of conservation-oriented residential rate design.

Chapter 3 explores the distinction between essential household water use and discretionary demand within modern conservation policy.

Chapter 4 examines how these conservation principles have been incorporated into the regulation of New York's investor-owned water utilities.

Chapter 5 reviews the documented relationship between household occupancy and ordinary residential water demand.

Chapter 6 examines comparable utility implementation in other jurisdictions.

Chapter 7 evaluates administrative feasibility, including verification procedures, customer privacy, documentation, and program administration.

Chapter 8 integrates the evidence within New York's existing regulatory framework.

Chapter 9 presents the formal findings supported by the research.

Finally, Chapter 10 presents a recommendation for Commission consideration based upon those findings.

Footnotes

² New York State Department of Environmental Conservation, “Water Use & Conservation”; U.S. Environmental Protection Agency, WaterSense, “How We Use Water.” Return to text

³ New York State Department of Environmental Conservation, A Survey of Methods for Implementing and Documenting Water Conservation in New York (Water Conservation Manual); American Water Works Association, Water Conservation Programs—A Planning Manual (Manual M52), 2nd ed. (2017). Return to text

⁴ New York State Public Service Commission, Order Adopting Joint Proposal as Modified and Establishing Rate Plan, Case 23-W-0111 (issued May 16, 2024); American Water Works Association, Water Conservation Programs—A Planning Manual (Manual M52), 2nd ed. (2017). Return to text

⁵ U.S. Environmental Protection Agency, WaterSense, “Understanding Your Water Bill”; William B. DeOreo et al., Residential End Uses of Water, Version 2: Executive Report, Water Research Foundation, Project 4309, Report 4309A (2016); Liberty Utilities (New York Water) Corp., Threshold Analysis Study 2024, Case 23-W-0235 (filed December 27, 2024). Return to text

⁶ Research sources examined throughout this report include New York State Public Service Commission proceedings, Department of Public Service materials, New York State Department of Environmental Conservation publications, U.S. Environmental Protection Agency guidance, American Water Works Association publications, Water Research Foundation research, and documented utility materials identified in the References. Return to text

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