AWWA JAW49873

The use of reclaimed water to offset potable water demands is becoming more popular. Setting reclaimed water rates and charges is an important factor in establishing and operating a reclaimed water system. This process is complex because it often costs more to provide reclaimed water than it does to provide potable water even though reclaimed water is generally of lower quality. The long-term benefits of reclaimed water, however, are significant enough that most utilities want to encourage its use. To illustrate how a utility should price reclaimed water in order to encourage its use, this article summarizes results of a survey of rates and pricing strategies used by 23 US utilities that operate reclaimed water systems. In addition, strategies for setting reclaimed water rates are discussed based on a case study developed for the city of Tucson, Arizona, Water Department. In some circumstanes, sound economic justifications exist for pricing reclaimed water below its embedded cost-of-service level. Includes 5 references, tables.