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Non-residential water customers use nearly 43% of public water supplied in the United States[1]. In fact, their portion of public water demand has increased over the past twenty years as water efficiency in the residential sector has improved. Studying customer behavior has become an essential management strategy for most businesses. Yet this group of water customers is largely understudied by utilities, in large part because it is an extremely diverse customer classification[2]. There are many ways to slice-and-dice the data. This blog post describes one way of identifying the big changes that big customers make.

The study: Over the past year, the Environmental Finance Center has worked with the North Carolina Urban Water Consortium and Valor Analytics to develop meaningful and feasible metrics to track non-residential water customers’ behavior. Utilities can incorporate these metrics into their practices to better understand and anticipate non-residential water customer water use and revenue impacts.

Meaningful metrics: One such metric is called the plateau: a significant and sustained change in water use behavior.

Plateau Image

The research team worked with the billing records from a few North Carolina water utilities to identify non-residential customers that both “up-plateaued” and “down-plateaued” between the years 2009 and 2013. This time period fell after a major drought in North Carolina. Those customers identified as “up-plateau” customers increased their average water use by at least 25%. This increase may be due to an increase in production or a change in ownership. Those customers identified as “down-plateau” customers decreased their average water use by at least 25% – perhaps due to a decrease in production or an investment in water efficiency.

With non-residential customers, the change is most likely due to a structural change (new user, changed operations, renovation, new equipment, etc.), rather than behavioral change. Ultimately, the impact of an up- or down-plateau on the utility’s water resources and finances depends on the starting and ending point of a customer’s new normal. It is important for the utility to know who changed and by how much.

Digging deeper: For example, one utility had more non-residential customers that “up-plateaued” their water use than “down-plateaued.”

Plateau Count

But the non-residential customers that decreased water use did so to a greater degree than those that increased water use – in fact almost twice as much.

Plateau Extent

The non-residential customers that made significant and sustained decreases in average water used had nearly twice the impact on water demand than the non-residential customers that made significant and sustained increases in average water use. In other words, although there were 69 fewer “down-plateauers” than “up-plateauers,” their total sustained decreases in water use were nearly twice the total sustained increases in water use of their counterparts.

Once these big customers with big changes are identified from the billing system, the water utility can conduct individual follow-ups. They can start with these six customers. Why did they reduce their water use by so much? Do they ever they plan to increase water use? Simply following up with these six customers can help the utility plan better for water resource and financial sustainability.

 

 

[1] Maupin, M, J. Kenny, S. Hutson, J. Lovelace, N. Barber, and K. Linsey. 2014. Estimated Use of Water in the United States in 2010. U.S. Geological Survey Circular 1405. US Department of the Interior, Washington.

 

[2] Morales, M. and J. Heaney. 2014. Classification, benchmarking, and hydroeconomic modeling of nonresidential water users. Journal AWWA Peer-Reviewed Article. December 2014; 106:12.

 

 

One Response to “When Big Customers Make Big Changes”

  1. Valor Water | When Big Customers Make Big Changes

    […] Valor Water Analytics recently built Non Residential Customer Sales Dashboards for four utilities in North Carolina. Read about the project’s Plateau Analysis and how these utilities are putting findings into action on project partner University of North Carolina’s Environmental Finance Center, here: When Big Customers Make Big Changes. […]

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