AWWA CONS51098

Due to State water conservation requirements that were instituted in the early 1980s, the City of Phoenix, Arizona began to aggressively pursue water conservation activities, including water conservation pricing. In 1982, Phoenix moved from the traditional decreasing block rate structure to a seasonal increasing block rate structure with the intent of encouraging higher water users to be more conservation oriented. By 1987, the City had begun to reexamine this rate structure and to explore the concept of using marginal cost concepts in its rate design. This paper examines the history of this discussion and how marginal costs are currently calculated and used for water rate development in the City of Phoenix. Includes table.