Why does consumer conservation cause higher prices every single time?

Question

The City of Long Beach California has just announced the raising of water prices by 20% beginning this fall. Reason given the conservation efforts in saving water by the citizens of the city have so drastically reduced their income from the sale of water they now need to raise prices to restore the cities income to previous levels. The same thing happened a couple of years ago with natural gas. So if we get charged more for conserving why should people conserve. Also our mayor was one of the three energy company leaders that helped set up deregulation in California and allowed the Enron scam to happen.

Answer 1

THis is not a scam.. or anything else.. and you are generalizing the facts.  

The City is raising water prices because 1) Utilities have a very large fixed cost structure that they have to spread across lower water uses and 2) as water becomes scarcer their cost of alternate sources of  water is more expensive.  I would bet that your cost of water would gone up a lot more if the City's residents did not conserve as much.

California has had years of drought.. if you do not think that has affected prices and the need for conservation .. think again.   We cannot continue to use resources indiscriminately.

Answer 2

best explanation for this and everything else is goin are business and politics.

see, no matter what they say or what you do to help, at the end of the day we will end up paying more.

They do nor care about nothing but making more money.

the come out and make all kind of stories and excuses to raise fees.

let me give you an exemple; the MBTA, is the public transportation in the state of MA. couple years ago, they raised fees cause not enough ppl were ridding the trains and buses and needed more money to keep them running. Now they want to raise the fees again becuase gas is expensive and more ppl are taking public transportation, that they need more money to keep up with maitnance. thing is that they didint even added and additional buses nor trains.

see what im saying? either way they get you.

We are in a system with no way out

Answer 3

The higher prices remind people of the worth of the resource, and because it affects them in such a direct manner they are encouraged to take measures to conserve and reduce their bill.  It's been effective before, and will have the desired results to some degree this time, too.

It is one tool to help ensure that a growing state population and limited resources will be available to all who need it.  Rainfall, snowpack, underground aquifers, SWP, CWP -- it's a complicated situation complicated further by drought and concerns over providing for a reliable longterm water supply for new development.  Agriculture in the Central Valley has received cutbacks which will entail a switch to less water-intensive crops.

A few sites from the Metropolitan Water District to help give you some background.  I don't know if they still do water tours, but I took a few about 10 years ago and they were very informative, and I can't look at an aquaduct or pumping station the same since.

Answer 4

Because the utilities have a huge fixed cost infrastructure that needs to be maintained. This take a certain amount of funds. when conservation methods are used, the utilities revenues are decreased, but they still have this enormous outlay of cash they have to make to keep the utilities flowing.

Another way to look it is from a supply and demand perspective. some people will say, well demand has decreased, so therefore price should decrease, but that isn't really the case.

What in fact has happened is demand has increased and increasing demand caused the conservation initiatives in the first place. If measures were not taken, then demand would have exceeded supply. This is why conservation was required.  Everyone needs utilities, but the amount they need varies, and there is certainly a lot of waste.

The utility companies have been rather stupid from a Public Relations perspective. They should have raised prices  to control demand initially, and then implemented a conservation strategy in order to reduce households' monthly bill to previous levels. Then everyone would have been happier.

Answer 5

consumer conservation includes the externatlities of the prices. the problem is how these companies and even the government think of this way. there should be a sustainable way of these process.

Answer 6

Price are being raised by 20%, they are doing this so that water can be saved. They know that in future there will be shortage of water thats why they are taking this step so that people will save water as it will cost more than earlier.

Due to price rise water will be saved; but it effect the pocket of common citizens (middle class and lower class).