One of the greatest challenges facing many U.S. communities today is supporting a growing population with limited water resources. Conservation is widely acknowledged as a critical part of the solution, but often utility conservation efforts are heavily focused on existing customers and ignore new customers at the crux of the challenge. This first-of-its-kind report focuses on the extent to which water connection charges are encouraging watersaving design in new construction and landscaping before ground is broken.
Water connection charges — also called tap fees, impact fees, system development charges, or plant investment fees — are one-time charges assessed to new developments to help pay for the direct costs of connecting to a utility’s water system, and for the infrastructure and water resources capacity needed to support these new developments. These one-time charges provide utilities with much-needed revenue to pay for water system infrastructure; importantly, they can also be designed to influence water demand in new developments.
Although extensive research has been done on how to price the volume of water sold month by month in order to encourage water efficiency in residential and business customers, far less attention has been focused on structuring connection charges in ways that will encourage developers to incorporate water-saving features into project designs.
For this report, the EFC worked with Western Resource Advocates and Ceres to survey 800 water connection charge structures used by communities in Georgia, North Carolina, Arizona, Colorado, and Utah. These states are five of the fastestgrowing states in the U.S. and have all experienced some degree of water scarcity and resource vulnerability. They are, therefore, more likely to have connection charges designed to influence future water demand.
This report reviews current trends, case studies that highlight the potential of connection charges to change development patterns, and makes recommendations for utilities considering using water connection charges.