Denver Water adopted a new rate structure that determines how our customers are charged for water. The rate changes went into effect April 1, 2016.
How does the new rate structure work for commercial, industrial and multifamily customers?
To provide more revenue stability, the fixed monthly charge increased and varies by meter size. The fixed charge by meter size reflects the cost of facilities needed for meeting the demands of larger users. This more accurately reflects the cost to serve each individual customer. Customers can verify meter sizes by looking at their bills.
The first, least expensive tier is based on a customer’s average winter consumption, calculated by averaging the customer’s monthly water consumption on bills dated January, February and March each year (beginning in 2016). System demands are typically lowest in these three months, so non-peak rates are assigned to this tier.
Each month, the amount of water used up to the average winter consumption is charged at this rate. The minimum possible average winter consumption is 1,000 gallons.
A customer’s threshold for the second tier is equal to four times the customer’s average winter consumption, to account for the customer’s peak usage.
Any use above the second tier falls into the third, highest-priced tier.
How does the new rate structure compare to the old rate structure?
Prior to the 2016 rate changes, customers were charged based on two tiers of usage and two seasons — winter (Nov. 1 through April 30) and summer (May 1 through Oct. 31). See the charts below for a comparison of 2015 and 2016 rates under the new structure.
Comparison: Nonresidential — Inside City 2015 Multifamily Rates 2016 Nonresidential Rates Fixed Monthly Charge $6.74 Block/Tier Fixed Monthly Charge $8.79† Monthly consumption (gallons) Rate per 1,000 gallons Rate per 1,000 gallons Monthly consumption (gallons) 0 – 15,000‡ $3.02 1 $2.68 0 to average winter consumption (AWC)* Over 15,000‡ $3.62 2 $3.75 Up to 4 times AWC 3 $4.29 Greater than 4 times AWC
Comparison: Nonresidential — Read & Bill 2015 Multifamily Rates 2016 Nonresidential Rates Fixed Monthly Charge $6.74 Block/Tier Fixed Monthly Charge $8.79† Monthly consumption (gallons) Rate per 1,000 gallons Rate per 1,000 gallons Monthly consumption (gallons) 0 – 15,000‡ $3.43 1 $3.32 0 to average winter consumption (AWC)* Over 15,000‡ $4.12 2 $4.65 Up to 4 times AWC 3 $5.31 Greater than 4 times AWC
Comparison: Nonresidential — Total Service 2015 Multifamily Rates 2016 Nonresidential Rates Fixed Monthly Charge $6.74 Block/Tier Fixed Monthly Charge $8.79† Monthly consumption (gallons) Rate per 1,000 gallons Rate per 1,000 gallons Monthly consumption (gallons) 0 – 15,000‡ $4.29 1 $3.76 0 to average winter consumption (AWC)* Over 15,000‡ $5.15 2 $5.26 Up to 4 times AWC 3 $6.02 Greater than 4 times AWC
*Nonresidential AWC: The first tier's threshold is based on each customer’s average winter consumption (AWC). This represents demands during the system off-peak period. The AWC is determined by averaging the customer’s monthly water consumption on bills dated January, February and March. Volume rates are applied to actual monthly usage. The second tier is equal to four times the customer’s AWC. The third tier is for usage in excess of four times the AWC.
†Fixed monthly charge for a 3⁄4-inch meter.
‡Applies to two dwelling units. Block threshold increases by 6,000 gallons per dwelling unit up to five dwelling units.
Will my bill be higher or lower with this new rate structure?
The possibility of experiencing an increase or decrease from previous bills is not limited to one type of customer. Here are some reasons why:
- Changes in the fixed monthly charge vary, because this charge is now based on meter size.
- The new tiered structure is individualized. A customer’s average winter consumption sets the customer’s threshold for the first tier.
- Unlike the previous structure, which charged the same rate for all summer usage, the new tiered structure assigns cost to usage based on a customer’s individual average and peak demands.
- Customers with a high average winter consumption pay the lowest rate for the first tier and have a higher threshold for the second tier. Because their peak falls within the winter, a higher percentage of their water use will be billed in the first tier.
- Customers with a low average winter consumption and high summer usage will have lower thresholds for the first and second tiers. Their summer use is billed in the second or third tiers, based on the cost of providing service during peak demands.
Why did you make this change to the rate structure?
The new structure is more equitable, because it is based more on each customer’s specific impacts on the system. Customers who have higher peak water use are more expensive to serve because system facilities must be sized to serve peak demands.
The new structure adds revenue stability. The old seasonal structure resulted in more revenue recovery in the summer, when water use — just like weather and subsequent watering demands — is unpredictable. The new structure shifts some of this revenue recovery from the summer to winter months.
Also, the new structure eliminates the imbalance the seasonal structure perpetuated by allowing the high summer rate to subsidize the winter rate. It is still tiered — the more a customer uses, the more a customer pays — but it does not base costs on what time of year water use occurs.
What is average winter consumption, and why did you select bills dated in January, February and March to determine it?
The lowest demands occur from January through March. We used this as the basis for the first tier and recognize the lower cost to serve these non-peak demands.
Why is there no maximum average winter consumption for commercial customers?
Water use varies greatly by customer type and industry (car washes, laundromats, etc.). There is not an average winter consumption — and therefore no appropriate maximum — that applies to all industries.
How can I lower my bill?
Denver Water is dedicated to helping all of our customers become as efficient as possible. If you are interested in learning how your property could be more efficient, or if you have concerns about your current water use, please complete and submit a consultation form. A Denver Water conservation expert will contact you to discuss your property and services we can offer.
Be sure to check out our commercial rebates, too.
What if I have questions about my bill?
Call Customer Care at 303-893-2444.