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The Mitchell Rate Structure

The Mitchell Rate Structure. Jason Barrett, Extension Associate Alabama Water Resources Conference Orange Beach, Alabama 2011. Presentation Outline. Definitions: Conservation and Fairness Assumptions with Conservation and Fairness Literature Support Case Rate Analysis. Definitions.

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The Mitchell Rate Structure

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  1. The Mitchell Rate Structure Jason Barrett, Extension Associate Alabama Water Resources Conference Orange Beach, Alabama 2011

  2. Presentation Outline Definitions: Conservation and Fairness Assumptions with Conservation and Fairness Literature Support Case Rate Analysis

  3. Definitions Conservation = The preservation and careful management of the environment and of natural resources (The Free Dictionary online) Fairness = Just, equitable, unbiased treatment (The Free Dictionary online)

  4. Assumptions Conservation = We all need to conserve water now so that future generations have the use of a sustainable water supply. Fairness = There is no one customer that should pay more for an equal amount of water than another customer. (There are variances.)

  5. Literature Support Florida Water Rates Evaluation of Single-Family Homes John B. Whitcomb, PhD 2005

  6. Literature Support Socioeconomic Profiles Demand Curves Price Breakpoint (Price Elasticity) Conclusion

  7. Literature Support Socioeconomic Profiles Property Value Assessed Property House Size PercentileValue(Sq Ft) Profile 1 25% $57,890 1,350 Profile 2 50% $84,330 1,727 Profile 3 75% $126,932 2,197 Profile 4 90% $197,400 2,841

  8. Literature Support Demand Curves

  9. Literature Support Price Breakpoint (Price elasticity) “As price exceeds $6, additional water savings become progressively harder to achieve as customers have cut back to core water uses (e.g., indoor water for toilets, showers, clothes washers, and cooking)

  10. Literature Support Conclusion “The fixed monthly charge has no correlation to usage, hence water systems can make revenue neutral changes in their rate structure by decreasing fixed charges and increasing quantity charges, so as to increase the price signal and lower total water consumption.”

  11. Case Rate Analysis Scenario #1

  12. Case Rate Analysis Scenario #1

  13. Case Rate Analysis Scenario #1 (Mitchell Rate Structure)

  14. Case Rate Analysis Scenario #2 (Mitchell Rate Structure)

  15. Conclusion Summary Studies show that price does have an impact on consumption (Florida study). The Mitchell Rate Structure promotes fairness, maintains revenue, and triggers conservation.

  16. Conclusion Summary Studies show that price does have an impact on consumption (Florida study). The Mitchell Rate Structure promotes fairness, maintains revenue, and triggers conservation.

  17. Grant Mitchell

  18. Questions

  19. Contact Information Jason Barrett 374 Lloyd-Ricks-Watson Building Miss. State, MS 39762 662.325.6807 phone / 662.325.8777 fax barrett@agecon.msstate.edu www.msucares.com/water

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