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Show SUMMARY OF FINDINGS Figure ES- 5 Increasing Block Rate Illustration 3 I 2.5 - W z 2 2 - ; _ J : < O : O : g 1.5 " ! 1 CO - | j OC : : < d 1 1 : O : Q : : 0.5 - j I o u i \ 1 L 0 10 20 30 40 MONTHLY WATER USE ( IN 1,000 GALLONS) Ratchet Rates This rate structure is a variation of an increasing block structure. As with an increasing block structure, ratchet rates charge higher rates for higher volumes of consumption. The difference is that as the customer enters a new rate block, all consumption is priced at the higher rate level. The conservation incentive inherent in a ratchet rate is very high. This rate structure appears to be essentially a theoretical one. No examples of water utilities implementing this type of a structure were found. Attempts to calibrate such a pricing system under standard cost- of- service principles would likely be quite difficult due to the large potential swings in collected revenues that could occur if water consumption forecasts were even mildly inaccurate. It is also highly likely that this rate structure would be unpalatable to most customers. ES- 19 Executive Summary |