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 grow and demands on water systems change, governments and water utilities must protect available water resources while maintaining safe, reliable, and reasonably priced public service.⁶

Water conservation has therefore evolved from an occasional response to drought into a continuing objective of modern utility management. Conservation programs may include public education, leak detection, infrastructure improvements, water-efficient technologies, customer outreach, and conservation-oriented residential rate design. These measures seek to reduce unnecessary demand while preserving the service and basic indoor water needs on which households depend.

Residential rate design is one important part of that framework. Inclining block rates charge progressively higher prices as consumption rises, creating a stronger financial incentive to conserve at higher usage levels. At the same time, water rates must recover authorized utility revenues and operate within the Commission's broader obligation to establish just and reasonable rates. Conservation effectiveness, cost recovery, and rate equity therefore form related—not mutually exclusive—considerations in residential rate design.

Households also differ in important ways. Some consist of one resident, while others include couples, children, grandparents, multiple generations, or unrelated adults sharing one residence. The number of residents is a documented factor affecting indoor demand because additional people perform the same basic activities—drinking, cooking, bathing, sanitation, laundry, and cleaning—behind one residential meter. Higher household volume can therefore reflect household occupancy, inefficient fixtures, leaks, discretionary use, or a combination of factors.⁷

Those differences create a legitimate regulatory question. A uniform starting block is simple and applies the same numerical threshold to each account within a service class, but equal numerical treatment does not necessarily produce the same effect when the underlying number of residents differs. The relevant rate-equity question is whether conservation pricing can better distinguish basic indoor water needs associated with household occupancy from higher use that presents greater opportunities for discretionary reduction.

This revised report examines that question within New York's existing regulatory framework, with particular attention to the history and current structure of Veolia Water New York's New York Rate District.

Purpose of the Report

The purpose of this report is to examine the rate-equity implications of applying a common starting residential water allocation to households with materially different occupancies, and to evaluate whether a neutral, optional, verified household-occupancy adjustment can better align that starting allocation with basic indoor water needs while preserving conservation objectives, fair revenue recovery, reasonable customer impacts, administrative feasibility, customer privacy, and program integrity.

This report begins from the premise that conservation-oriented rates should continue to encourage efficient water use. The narrower rate-equity question is whether a common starting threshold can place some basic indoor water needs into higher-priced conservation tiers simply because more people share one meter. The report therefore evaluates whether a neutral, optional, verified adjustment can improve rate equity while preserving strong conservation incentives.

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.

The revised edition also gives greater attention to the historical New York record. It examines how the Rockland residential blocks were originally developed, concerns raised about larger households, the Commission's response, the later service-classification study, the continuation of the block thresholds, and more recent Liberty analysis. Comparable utilities are then used to assess practical implementation approaches rather than to prescribe New York's final design.⁸

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.

Scope

This report examines New York Public Service Commission regulation of investor-owned water utilities as the governing context, while the immediate rate-design analysis and recommendation center on Veolia Water New York's New York Rate District and related New York proceedings.

New York Public Service Commission proceedings, including Cases 16-W-0130, 19-W-0168, 23-W-0111, 23-W-0235, and relevant subsequent developments;
Veolia Water New York and the earlier SUEZ Water New York regulatory record;
Liberty Utilities (New York Water) Corp.;
Department of Public Service materials and utility testimony;
current tariffs and service classifications where relevant;
New York State Department of Environmental Conservation publications;
United States Environmental Protection Agency guidance;
American Water Works Association and Water Research Foundation materials;
comparable utility programs and documented administrative practices relating to verification, privacy, renewal, and program administration.

The report does not prescribe a fixed gallons-per-person formula, household-size cutoff, tariff provision, or verification standard. It does, however, identify the policy direction at issue: whether the Commission should develop a workable optional occupancy adjustment if the record supports implementation. The report also does not attempt to resolve every water-rate equity issue, including broader questions concerning low-income rates, fixed charges, or multi-family affordability.

Methodology

This report is based primarily on official regulatory and governmental sources, supplemented by utility policies, industry research, and documented comparative programs. The revised edition follows a New-York-first approach: historical and current New York records establish the regulatory context before comparative utilities are used to illustrate implementation practices.

The source hierarchy gives greatest weight to Commission Orders, tariff provisions, filed utility testimony, filed studies, Department of Public Service materials, government publications, and official utility rules. Party testimony and consultant reports are attributed to the party or author that offered them. Comparative sources are not treated as New York precedent, and factual limitations are stated where the record does not quantify prevalence, customer-specific bill effects, cost-of-service consequences, or administrative cost.

Direct quotations are used where the source language is especially important; otherwise the report uses accurate paraphrase with footnotes to the underlying material. The revised edition also distinguishes between what the record establishes, what it suggests, and what remains an implementation question for the Commission.

Organization of the Report

The report is organized as a sequential investigation.

Chapter 1 establishes conservation, reliable service, and equitable regulation as governing public-policy considerations.

Chapter 2 examines why utilities use tiered residential water rates and how conservation price signals interact with cost recovery and different causes of higher household use.

Chapter 3 examines basic indoor water needs, discretionary demand, and the continuing responsibility of households of every size to use water efficiently.

Chapter 4 reconstructs the New York regulatory history of the SUEZ/Veolia residential rate structure, including the 2016 rate-design record, the 2017 Commission Order, the 2019 service-classification study, later rate-design continuity, and recent Liberty developments.

Chapter 5 reviews the documented relationship between household occupancy and indoor residential water demand, including New York utility-specific evidence and remaining data limitations.

Chapter 6 examines comparable utility implementation in other jurisdictions and identifies what those programs do—and do not—establish for New York.

Chapter 7 evaluates administrative feasibility, including verification, customer privacy, documentation, renewal, program integrity, and the limits of available cost evidence.

Chapter 8 integrates the evidence within New York's regulatory framework and examines competing rate-design considerations, including conservation, rate equity, revenue recovery, customer impacts, neutral eligibility, and administration.

Chapter 9 presents the formal findings supported by the revised evidentiary record.

Finally, Chapter 10 recommends Commission consideration directed toward a practical optional occupancy adjustment, while leaving the precise formula and implementation mechanics to the regulatory process.

Footnotes

⁶ New York State Department of Environmental Conservation, 'Water Use & Conservation' and A Survey of Methods for Implementing and Documenting Water Conservation in New York; U.S. Environmental Protection Agency, WaterSense, 'How We Use Water.' Return to text

⁷ William B. DeOreo et al., Residential End Uses of Water, Version 2: Executive Report, Water Research Foundation, Project 4309, Report 4309A (2016); Black & Veatch, SUEZ Water New York Inc. Water Conservation Plan, Case 16-W-0130, Exhibit SCPP-2; Liberty Utilities (New York Water) Corp., Threshold Analysis Study 2024, Case 23-W-0235. Return to text

⁸ New York State Public Service Commission, Case 16-W-0130; New York State Public Service Commission, Case 19-W-0168; New York State Public Service Commission, Case 23-W-0111; New York State Public Service Commission, Case 23-W-0235; Liberty Utilities (New York Water) Corp., 2026 rate filing materials associated with Case 26-W-0358. Return to text

Want to support fairer water rates?

If you'd like to support fairer residential water rates, you can send a message to your New York State legislators asking them to support both an optional household-size adjustment and a fairer rate structure for master-metered multifamily properties.

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Note: This campaign focuses on Veolia Water New York customers in Rockland and Orange Counties.