The grim economy is hitting some consumers in the wallet in yet another way: their water bills.
Many water utilities are raising rates because water use is down, in part because manufacturers have closed or are cutting back, tourism has fallen and the real estate market is in the doldrums.
Water companies for the most part get their money from customers. When water consumption goes up, revenues go up — but when consumption falls, so do revenues.
Water companies often raise rates to pay for high-priced capital expenditures, such as new water lines or treatment plant expansions. But they also have to hike rates when water use goes down to bring in enough money to pay their basic operating costs.
They have it exactly backward, in the same way as cities screw up on tax policy. If demand is low, you're going to jack up the rates? But that will just further drive down usage!
Cleveland didn't (doesn't) get this. Population starts to leave, so in an attempt to keep the tax revenues from falling, they jack up the rates... which makes more people leave, so they jack up the rates... Duh!
If you want to attract people top cities, or encourage water usage, LOWER the rates. People will have more incentive to come to the city, or to use the water. If you want to cut costs (the other, more greatly neglected way to strike a balance), lose some employees. After all- usage is down! Less for them to maintain.
As for me, I'm not entirely unhappy that water usage is down. Water resources are scarce, and lower usage natioally might allow some aquefers to recharge. Many desperately need to be. Raising rates is an excellent conservation tool. Idiot utility managers are accidental environmentalists.