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Responding to second and third consecutive drought years, East Bay Municipal Utility District implemented drought programs with mandatory conservation goals by customer group, strict ordinances on water use, an inclining-block rate structure, and an extensive public relations program. These measures collectively achieved reductions in consumption during the summers of 1988 and 1989 of 30 and 27 percent, respectively, compared with the targeted 25 and 15 percent conservation levels that had been established for these periods. The bulk of the article explains how the rates were restructured to encourage conservation among the target groups. Deriving the revenue-neutral rate and the process of selecting a rate structure are discussed. The cost of administering the program was considerable: the computer system for implementation and monitoring of the new rate structure required 40 person-months of labor. Includes 2 references, tables, figures.