This report explores the feasibility of an innovative business model for water utilities made possible with a smart water grid: interruptible irrigation rates. Overall, the "business case" for an interruptible irrigation rates program by a water utility is mixed and highly dependent on the structure of a utility and its customer base. Using a synthesis of interviews, research, data analysis, and program simulations, the report provides discussion, suggestions and recommendations for the implementation of an interruptible irrigation rates program. The main findings of the report are:
While the decision to install the necessary metering technology (AMI) at a utility-wide scale is not likely to be influenced by the desire to implement an interruptible irrigation rates program, the benefits of such a program would add to the cumulative benefits of investing in new water infrastructure.
Water supply, treatment capacity, and wholesale water purchases are three of many possible constraints that could benefit from obtaining remote turn-on and turn-off capabilities for irrigation meters.
Since customers tend to increase consumption when prices drop, which counteracts the utility’s goals of water conservation, our analysis finds that irrigation rate decreases between 5-15% exhibit properties conducive to satisfying the program goals.
Simulation results indicate that the utility should decrease rates just enough to induce customers to participate in the interruptible rates program (while also improving the cost-effectiveness of the interruptible rates program), though not so much so that it affects the utility’s revenue goals from decreased income in non-interrupted months.
The option of discounted variable rates for irrigation will incentivize customers who irrigate through a standard meter to install an irrigation meter. This will benefit the utility since a higher proportion of water volume flowing through an interruptible irrigation meter gives the utility more control over their distributional capacity in this type of program.